
Economics Economics Forum  Financial Mathematics, Econometrics, Operations Research, Mathematical Finance, Computational Finance 
 LinkBack  Thread Tools  Display Modes 
May 7th, 2012, 06:59 AM  #1 
Newbie Joined: May 2012 Posts: 1 Thanks: 0  Help with budget constraint and utility maximisation
Hi I really need help with the following question: Consider an economy with a single consumer whose preferences are given by U = c(l)^2 Where c is the consumers daily consumption of the consumption good and l is the number of hours that she spends producing the consumption good daily. She can Produce 8 units of the consumption good in an hour and there are 24 hours in a day. (a) Write down the consumers budget constraint and interpret it. (b) How many hours per day does the consumer choose to work? How many units of the consumption good does she get to consume in a day? It confuses me that the utility preference is in this form cl^2. I have looked online and only seem to find information on how to calculate cobb douglas utility functions. So far I've managed to draw a graph with consumption on y axis and leisure on x axis. Formulating the BC at pc=wl, here i assumed this to be c=8l. I'm left confused and my answers for sure don't add up Any advice would be greatly appreciated 

Tags 
budget, constraint, maximisation, utility 
Thread Tools  
Display Modes  

Similar Threads  
Thread  Thread Starter  Forum  Replies  Last Post 
constraint problem  helloprajna  Economics  0  February 18th, 2013 12:04 AM 
difficult maximisation problem  brighton  Calculus  8  March 8th, 2012 06:11 AM 
Applications of Maximisation and Minimisation  FryderykFChopin  Calculus  2  September 7th, 2011 12:20 PM 
Linear programming  profit maximisation  jb7  Applied Math  3  December 28th, 2009 01:09 PM 
difficult maximisation problem  brighton  Complex Analysis  0  December 31st, 1969 04:00 PM 