Discussion Post: Economics
I am has the utility function U = C0.5 l and receives non-labour income (net of taxes) equal to (π - T). Assuming that he has only h hours available in the period, answer the following questions.
o Using the optimality condition and the budget constraint, find expressions for the optimal consumption and leisure bundle (C*, l*).
o Find and interpret the following derivatives: ∂C*/∂w, /∂C*/∂T, ∂Ns*/∂w, /∂N s*/∂T, where N s is the individual's labour supply.
o How would your answer to b. change if Sam's utility function was U = Cl2 ? Show your work.
The response should include a reference list. Using double-space, Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.