Consider an individual who receives utility from consumption, c, and leisure, l. The individual has L time to allocate to work, n, and leisure. The individual’s consumption is a function of how much he works. In particular, c = root n. The individual’s maximization problem is max U =ln(c)+θl subject to c = √n n+l=L where θ > 0. Solve the maximization problem. Hint: Substitute both constraints into the objective function.

Consider an individual who receives utility from consumption, c, and leisure, l. The individual has L time to allocate to work, n, and leisure. The individual’s consumption is a function of how much he works. In particular, c = root n. The individual’s maximization problem is max U =ln(c)+θl subject to c = √n n+l=L where θ > 0. Solve the maximization problem. Hint: Substitute both constraints into the objective function.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section6.A: Indifference Curve Analysis

Problem 1SQP

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