Suppose a person's utility for leisure (L) and consumption (Y) can be expressed as U = Y + L0.5. Assuming a wage rate of $10 per hour, show what happens to the person's labor supply curve when the person wins a lottery prize of $100 per day
What will be an ideal response?
Rearranging yields U = (Y* + 10H) + (24 - H)0.5. Maximizing utility with respect to H yields H = 23.9975 hours. Note: H is not a function of Y* because the marginal utility of leisure is independent of income. Thus, the person's labor supply curve is not affected by winning the lottery.
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A) how to make money in the stock market. B) how to run a business successfully. C) the allocation of scarce resources. D) personal finance.
If the market price for a crop is $4.00 a bushel, and the price support is $3.00, then raising the price support to $5.00
A. will cause the price received by farmers to rise to $5.00. B. will cause the price received by farmers to rise to $4.00. C. will cause nothing to happen. D. will cause the price received by farmers to fall.