Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Buy Now $5.99
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
1Activity
0 of .
Results for:
No results containing your search query
P. 1
Calculation of MRS and Optimum Combination of Consumption and Leisure

Calculation of MRS and Optimum Combination of Consumption and Leisure

Ratings: (0)|Views: 15 |Likes:
Published by ClassOf1.com
"Shelly’s preference for consumption and leisure are:
U(C, L) = (C-200)*(L-80)
This implies that Shelley’s marginal utility of leisure is C-200, and her margin al utility of consumption is L-80. There are 168 hours available in the week. She also receives $320 worth of welfare benefits regardless of how much she works.
a) Graph her budget constraint.
b) What is her marginal rate of substitution when L = 100 and she is on the budget line?
c) What is her reservation wage?
d) What is her optimal combination of C and L?
"
"Shelly’s preference for consumption and leisure are:
U(C, L) = (C-200)*(L-80)
This implies that Shelley’s marginal utility of leisure is C-200, and her margin al utility of consumption is L-80. There are 168 hours available in the week. She also receives $320 worth of welfare benefits regardless of how much she works.
a) Graph her budget constraint.
b) What is her marginal rate of substitution when L = 100 and she is on the budget line?
c) What is her reservation wage?
d) What is her optimal combination of C and L?
"

More info:

Categories:Types, School Work
Published by: ClassOf1.com on May 23, 2013
Copyright:Attribution Non-commercial
List Price: $5.99 Buy Now

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
See more
See less

09/17/2013

$5.99

USD

pdf

text

original

You're Reading a Free Preview
Pages 2 to 7 are not shown in this preview.

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->