Write the equation for the agent’s budget constraint between consumption and leisure when he has positive...
Write the equation for the agent’s budget constraint between consumption and leisure when he has positive wealth.
Homework Answers
Assume that there is a wealth Z available with an agent. Fraction of the working hours is given by 1 - L where L is the fraction of leisure hours. Considering the wage rate 'w', consumption is given by C = (1 - L)*w + Z.
Rearrange this equation to get the budget constraint
C + wL = w + Z
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Write the equation for the agent’s budget constraint between
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