hw1 - much do each of them make per week(3 What are their...

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ACEO370 Masters Homework on Labor Supply Jenny has preferences given by the utility function U ( C; L ) = C 2 L so that the slope of her indi/erence curve is C 2 L : Johnny has the same preferences we saw in the class example (i.e. U ( C; L ) = CL so the slope of his indi/erence curve at any point is C L ) : (1) Which of them has the relatively stronger preference for consumption over leisure? Explain. (2) They can both earn $10 per hour and they both have a non-labor income of $300 per week (as in class). Who works the most hours? How
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Unformatted text preview: much do each of them make per week? (3) What are their reservation wages? (4) Starting from their preferred choice of work hours at $10 per hour (from part 2), suppose they were o/ered overtime at $20 per hour how many hours of overtime would each of them want to put in? How much would each of them earn? (5) Plot out the labor supply curves for Johnny and Jenny. Do either of them have backward bending labor supply curves? 1...
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This note was uploaded on 04/16/2008 for the course AECO 370 taught by Professor Masters during the Spring '08 term at SUNY Albany.

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