Irene earns 8 dollars an hour. She has no nonlabour income. She has 30 hours a...
Irene earns 8 dollars an hour. She has no nonlabour income. She has 30 hours a week available for either labor or leisure.
Her utility function is U(c, r) = cr2, where c is dollars worth of goods and r is hours of leisure. How many hours per week will she work?
a. 8 b. 13 c. 15 d. 10 Please explain the answer step by steps. Thank you!
Homework Answers
Solution
Irene earns 8 dollars an hour. She has no nonlabour income. She has 30 hours a week available for either labor or leisure.
Let x = hours of labour
30 - x = hours of leisure
U = (8x).(30 - x)2
Utility will be maximized when: dU/dx = 0
dU/dx = 8.(30 - x)2 -16x.(30 - x) = 0
Solve for 'x':
x = 10 (option d)
Add Answer to:
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