HOMEWORK > ECON 425: Economics of Public Expenditures Homework Assignment 5 SOLUTIONS

Pennsylvania State University ECON 425 Problem 1: Labor-Leisure Choice. Kim has utility over consumption c and leisure l   represented by   U(c, l) = c1/3l2/3   Kim has 2,000 hours to spend on either labor or leisure. Her hourly wage is w = $7.50.   a) Draw Kim’s budget constraint.   b) What is Kim’s optimal level of consumption? Leisure ...[Show More]

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