5. Rhoda’s preferences for consumption and leisure can be expressed as U(C, L) = (C - 100) × (L - 40). There are 110 (non-sleeping) hours in the week available to split between work and leisure. Rhoda earns 10 GHS per hour after taxes. She also receives 320 GHS worth of support from her parents each week regardless of how much she works. a. What will be Rhoda’s marginal utility of leisure and her marginal utility of consumption? b. What is Rhoda’s marginal rate of substitution when L = 100 and she is on her budget line? c. Find Rhoda’s optimal amount of consumption.

5. Rhoda’s preferences for consumption and leisure can be expressed as U(C, L) = (C - 100) × (L - 40). There are 110 (non-sleeping) hours in the week available to split between work and leisure. Rhoda earns 10 GHS per hour after taxes. She also receives 320 GHS worth of support from her parents each week regardless of how much she works. a. What will be Rhoda’s marginal utility of leisure and her marginal utility of consumption? b. What is Rhoda’s marginal rate of substitution when L = 100 and she is on her budget line? c. Find Rhoda’s optimal amount of consumption.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter7: Demand And Supply

Section7.1: Demand

Problem 5R

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