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Problem Set One Labor Economics - Professor Groves Due at the start of class on February 27 Directions: All writing for this problem set must be...

Need help with questions 3-7 please

5.) (10 points) The utility function of a worker is represented by U(C,L) = C x L. The marginal utility of leisure is then given by MU L = C and the marginal utility of consumption is given by MU C = L. Suppose that this person currently has a weekly income of \$600 and enjoys 70 hours of leisure per week. How many additional dollars of income would it take to make a nonworker give up 10 hours of leisure time (and remain equally happy)? 6.) (20 points) Using the multiple regression results below, answer the questions that follow (standard errors are in parenthesis below coefficient estimates). Assume that savings per year is in dollars, Y is annual income from wages or salary, ED is years of education completed, and F indicates a female respondent: μ + + + + = ) F ( . ) ED ( . ) Y ( . . year per Savings 45 222 90 50 15 0 5 150 (20.6) (0.005) (35.80) (52.68) a) Interpret the coefficient estimates on all independent variables (sign of coefficient, magnitude of estimate). b) Which independent variables are statistically significant? How do you know this? c) What is the savings penalty for men? d) What is the marginal propensity to save (MPS)? Consume (MPC)?

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