Solve for her optimal choices of consumption

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Reference no: EM13189561

Consider an individual with preferences over consumption c and leisure l given by:

u(c,l) = [(c^(1-γ ))/(1-γ)] + al

where γ > 0 and a > 0 are constants. She is endowed with h hours of time to divide between working at wage w and leisure. She has no unearned income, and thus uses all her labor income for consumption.
(a) Solve for her optimal choices of consumption and leisure.
(b) Under what conditions does her labor supply curve slope up or down?

Reference no: EM13189561

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