2) Jane's Labor Supply Problem Ercome pening Suppose Jane is a qualified craftswoman who can help produce widgets. Her utility function depends on her consumption of two goods: stuff and leisure. She...

A, b and c

0. (2d) Suppose the price of stuff went up from $10 per unit to $15 per unit. How much does Jane work if her wage is $5 per hour (w = 5) ? What about w = 10 ? w = 15 ? (2e) Suppose Jane used to make a wage of $10 per hour (w = 10) when the price of stuff was $10 (p = 10). Now that prices are $15 (p = 15), how much of a pay raise does Jane need in order to achieve the same utility as before? This is known as the inflation problem in macroeconomics. "/>
Extracted text: 2) Jane's Labor Supply Problem Ercome pening Suppose Jane is a qualified craftswoman who can help produce widgets. Her utility function depends on her consumption of two goods: stuff and leisure. She spends her entire income on stuff. Her utility maximization problem is as follows: Utisty= wt+ Vz4-L Sutility W,L max Utility=JX + /24 – L where PxX = w × L z VP, and 0<><24 .v24-l="" jane's="" utility="" maximization="" problem="" can="" be="" rewritten="" using="" the="" following="" indirect="" utility="" function'="" that="" incorporates="" her="" budget="" constraint="" max="" indirect="" utility="L+ /24 – L P ' Indirect utility function is the utility function where the budget constraint is plugged-in. Treat in a similar manner as the utility function. This is because the budget constraint implies that for each hour she works, she can buy an additional " unit(s)="" of="" stuff.="" p="" for="" now,="" assume="" that="" jane="" is="" a="" price-taker="" in="" both="" the="" market="" for="" stuff="" (where="" she="" buys)="" and="" the="" market="" for="" labor="" (where="" she="" sells).="" (2a)="" suppose="" the="" price="" of="" stuff="" is="" $10="" (p="10)." how="" much="" does="" jane="" work="" if="" her="" wage="" is="" $5="" per="" hour="" (w="5)" (2b)="" what="" about="" w="$10?" w="$15?" sketch="" jane's="" labor="" supply="" curve.="" (2c)="" at="" w="10," does="" the="" substitution="" effect="" dominate="" the="" income="" effect="" or="" vice="" versa="" briefly="" explain="" your="" answer.="" optional:="" this="" particular="" labor="" supply="" curve="" does="" not="" backward-bend="" for="" any="" positive="" wage.="" can="" you="" prove="" this?="" hint:="" need="" to="" show="" that="" for="" all="" w=""> 0. (2d) Suppose the price of stuff went up from $10 per unit to $15 per unit. How much does Jane work if her wage is $5 per hour (w = 5) ? What about w = 10 ? w = 15 ? (2e) Suppose Jane used to make a wage of $10 per hour (w = 10) when the price of stuff was $10 (p = 10). Now that prices are $15 (p = 15), how much of a pay raise does Jane need in order to achieve the same utility as before? This is known as the inflation problem in macroeconomics.