HW2
1. Suppose John Cenas preferences are represented by U[x,y]=x y1_ where o is an
arbitrary eonstant between t] and 1. For some Pl, D; PI, 1: , and I 12:!)
[a] Solve for the optimal x1: and y* as functions of , Pa; P3; and I
(b] Are goods 1: and y norm
Sacrifice and Stigma: Solutions
a) More committed members are more willing to sacrifice their time, money, energy, and
such for the sake of groups other members or values. High involvement might take the
form of high rates of involvement in group activiti
2. Suppose Joshua Ng gets a nobel prize and is oered a job at UCLA. Currently he
works in Riverside where the price of korean bbq is 6 dollars and Kimchi is 1 dollar. In
addition Josh also earns an income of 72 dollars at his current job. His new job offe
Whenpricesgoup,quantitysuppliedgoesup.
Buildasupplyanddemandcurveandadjustittogovernmenttax(extratriangle).
GovernmentPoliciesthatalterthePrivateMarketOutcome
PriceControls
o PriceCeiling:alegalmaximumonthepriceofagoodorservice.Ex:rent
control
o Pricefloo
HW: The Labor-Leisure (goods/time) Framework
with an extension to marriage, education, and childrearing
Framework: Jane consumes just two goods: purchased goods (Y) and household time (T)
also known as leisure. Assume Jane has 1 unit/day of discretionary