Consider the following one-period model. Consumer Utility function over consumption (C) and leisure (L) U(C,L)= C^(1/2)L^(1/2) = Total hours: H = 40 Labour hours: = H - L Non-labour income: t Lump-sum...

Consider the following one-period model.<br>Consumer Utility function over consumption<br>(C) and leisure (L) U(C,L)= C^(1/2)L^(1/2) =<br>Total hours: H = 40 Labour hours: = H - L<br>Non-labour income: t Lump-sum tax: T<br>Hourly wage: w Firm Production function: Y =<br>zF() = z Total factor productivitiy: z = 2<br>Government Government spending<br>(exogenous): G = 20 Suppose that the total<br>factor productivity, z, increases to 5. What is<br>the substitution effect of this wage change on<br>labour supply()? A. +8.51 B. -5.51 C. -8.51 D.<br>+5.51 E. None of the above<br>

Extracted text: Consider the following one-period model. Consumer Utility function over consumption (C) and leisure (L) U(C,L)= C^(1/2)L^(1/2) = Total hours: H = 40 Labour hours: = H - L Non-labour income: t Lump-sum tax: T Hourly wage: w Firm Production function: Y = zF() = z Total factor productivitiy: z = 2 Government Government spending (exogenous): G = 20 Suppose that the total factor productivity, z, increases to 5. What is the substitution effect of this wage change on labour supply()? A. +8.51 B. -5.51 C. -8.51 D. +5.51 E. None of the above

Jun 10, 2022

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Consider the following one-period model. Consumer Utility function over consumption (C) and leisure (L) U(C,L)= C^(1/2)L^(1/2) = Total hours: H = 40 Labour hours: = H - L Non-labour income: t Lump-sum...

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