What is the equilibrium consumption level

Reference no: EM132200876

Question: Suppose a consumer maximizes U(C,l) = ln(C) + ln(l), where C is consumption and l is leisure. The maximum time available for work and leisure is 1. Suppose a firm uses the following production function Y = z*Nd where Nd is labor used in production. The government collects a lump-sum tax T to finance government consumption G. Assume z = 10 and G = 6 and solve for the competitive equilibrium.

a) What is the equilibrium wage rate?

b) What is the equilibrium leisure level?

c) What is the equilibrium consumption level?

d) What is the equilibrium output (GDP)?

e) What is the equilibrium labor supplied?

f) What is the equilibrium level of welfare (i.e. the utility of consumption and leisure in equilibrium)?

g) What is the equilibrium level of firm profit?

Reference no: EM132200876

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