Find the optimal ratio of leisure to consumption

Assignment Help Business Economics

Reference no: EM13898310

Adam Sandler has a utility function U(C, L) = C1/3L1/2. The wages now available to him are $9/hr. Non-wage income in royalties are $6 a day.

a) Find the MUL and MUC.

b) Find the MRS for Leisure to Consumption to find the optimal ratio of Leisure to Consumption.

c) Write out and draw the Budget Constraint for Adam Sandler, assuming he has 24 in which he can work.

d) Find the optimal amount of L and C. (Hint: It may be easiest to use the two equations from parts b. and c.)

Reference no: EM13898310

Questions Cloud

Average total cost incurred by firm is calculated dividing : The average total cost incurred by a firm is calculated by dividing:

Short run refers to a period of time during which : Short run refers to a period of time during which:

Total annual consumption vs annual weeks of leisure : A person can chose to work any amount from 0 to 52 weeks per year at a wage of $1000 per week. Draw her annual budget constraint, representing total annual consumption vs annual weeks of leisure.

What would be its equilibrium profit : A monopolistic firm faces the following demand curve. Q = 7800 -12 P This monopoly's cost function has been estimated as follows: TC = 460,000 + 50 Q. What price should this monopoly charge to maximize its profit? What would be its equilibrium profit..

Find the optimal ratio of leisure to consumption : Adam Sandler has a utility function U(C, L) = C1/3L1/2. The wages now available to him are $9/hr. Non-wage income in royalties are $6 a day. Find the MRS for Leisure to Consumption to find the optimal ratio of Leisure to Consumption. Write out and dr..

The utility function of worker is represented : The utility function of a worker is represented by U(C,L) = C×L. Suppose this person currently has 100 hours of leisure and $1200 in consumption in a given time period. What must the worker’s hourly wage rate be if she is maximizing her utility?

Draw her annual budget constraint : A person can choose to work any amount from 0 to 52 weeks per year at a wage of $1000 per week. Draw her annual budget constraint, representing total annual consumption versus annual weeks of leisure.

Estimated costs functions to make productions decisions : In 1796, Gottfried Christoph Hartel, a German music publisher, calculated the cost of printing music using an engraved plate technology and used these estimated costs functions to make productions decisions.

Economic indicators-events that resulted in this loss : Choosing a long position on the USD/CHF (Us dollar/Swiss Franc) resulted in a loss over the past month. What in the past 2 months (September/October) could have been economic indicators/events that resulted in this loss? What would be any factors tha..

User Account

All Pages