1 Consider A Representative Consumer Who Consumes A Composite Good And Leisure I Suppose That The Consumer Preferences 1 (41.33 KiB) Viewed 30 times
1 Consider A Representative Consumer Who Consumes A Composite Good And Leisure I Suppose That The Consumer Preferences 2 (16.86 KiB) Viewed 30 times
1 Consider A Representative Consumer Who Consumes A Composite Good And Leisure I Suppose That The Consumer Preferences 3 (16.86 KiB) Viewed 30 times
1 Consider A Representative Consumer Who Consumes A Composite Good And Leisure I Suppose That The Consumer Preferences 4 (22.08 KiB) Viewed 30 times
1. Consider a representative consumer who consumes a composite good and leisure I. Suppose that the consumer preferences are represented by a Cobb-Douglas utility function U(C, 1) = Cal%. The consumer is endowed with T hours that could be spent on leisure I and labor L, they can earn a wage w for every hour worked. Let p be the price of the consumption good, and Y the non-labor income. (a) Set up the representative consun sumer problem (b) Derive the marshallian demand functions for C and I. Write the labor supply function. A representative firm uses labor L and capital K to produce the composite consumption output according to the production technology f(K, L) = {K® + LP). The firm earns p per unit of output and pays wage w for every unit of labor and interest rate r for every unit of capital. (a) Set up the profit maximization problem (b) Derive the input demand function for the representative firm. What is optimal production? Using your findings in both the representative consumer problem and the representative firm problem, study the impact of a minimum wage on the labor market. Make the simplifying assumtions you need, use diagrams when it is helpful. You essentially need to show the difference in market outcome and welfare between 2 cases: one without a minimum wage and one with a binding minimum wage.
1. Consider a representative consumer who consumes a composite good and leisure 1. Suppose that the consumer preferences are represented by a Cobb-Douglas utility function U(C, 1) = C7. The consumer is endowed with T hours that could be spent on leisure I and labor L, they can earn a wage w for every hour worked. Let p be P the price of the consumption good, and Y the non-labor income. (a) Set up the representative consumer problem (b) Derive the marshallian demand functions for C and I. Write the labor supply function.
A representative firm uses labor L and capital K to produce the composite consumption output according to the production technology f(KL) = {K® + L}. The firm earns p per unit of output and pays wage w for every unit of labor and interest rate r for every unit of capital. (a) Set up the profit maximization problem (b) Derive the input demand function for the representative firm. What is optimal production? Using your findings in both the representative consumer problem and the representative firm problem, study the impact of a minimum wage on the labor market. Make the simplifying assumtions you need, itse diagrams when it is helpful. You essentially need to show the difference in market outcome and welfare between 2 cases: one without a minimum wage and one with a binding minimum wage.
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