401ps1-10 - ECON 401A Autumn 2010 PROBLEM SET I(for...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON 401A Hartman Autumn 2010 PROBLEM SET I (for Thursday, October 7) In the following problems, let Y real aggregate output N labor K capital stock W nominal wage rate P price level C real consumption T real (lump sum) taxes I real investment r real interest rate measured as a percent i nominal interest rate measured as a percent G real government purchases M nominal money stock 1. Suppose the production function is Y N K 2 12 // where K is fixed at K 100. What is the demand function for labor? 2. A consumer derives satisfaction from consumption and leisure time, H . The consumer has an initial endowment of 24 hours. a. Suppose the consumer's preferences can be represented by the utility function UCH CH (, ) 2 . Determine the consumer's demand functions for leisure and consumption in terms of P and W . What is the consumer's supply function for labor? (Recall that the supply of labor will satisfy 24 NH .) b. Redo part a with the utility function UCH C H
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/04/2011 for the course ECON 401 taught by Professor Staff during the Spring '08 term at University of Washington.

Page1 / 2

401ps1-10 - ECON 401A Autumn 2010 PROBLEM SET I(for...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online