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Assume that a consumer’s satisfaction depends upon leisure L and income Y so that the utility function is U 48L LY L2 Let N denote the hours of work by the consumer and W the hourly wage

Assume that a consumer’s satisfaction depends upon leisure (L) and income (Y), so that the utility function is: U = 48L + LY – L2 Let N denote the hours of work by the consumer and W the hourly wage rate. Consequently, Y = WN and L + N = 24. If the hourly wage rate is $15 per hour: a) What are the utility maximizing hours of leisure, L*? b) What are the utility maximizing hours of work, N*?

Apr 01 2020 View more View Less

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