Derive the formula for the marginal rate of substitution

Reference no: EM13199258

Labor Supply
a. Ann's utility can be represented by the function:
U (C,L) = ln (C-10) + 3/5 ln(L). She has 16 hours/day to divide into work (H) and leisure (L). She has no unearned income. Derive the formula for her Marginal Rate of Substitution at any values of (C,L).

b. She has a wage of $10/hr and no unearned income. How many hours does she choose to work? How many hours of leisure does she consume? How many dollars of consumption does she consume?

Reference no: EM13199258

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