Dudley, in Problem 15, Has a Utility Function U(C, R)

question 7

Multiple Choice

Dudley, in Problem 15, has a utility function U(C, R) = C - (12 - R) ², where R is leisure and C is consumption per day. He has 16 hours per day to divide between work and leisure. If Dudley has a nonlabor income of $15 per day and is paid a wage of $8 per hour, how many hours of leisure will he choose per day?

• A) 5
• B) 6
• C) 7
• D) 9
• E) 8

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Definitions:

Price-Earnings Ratio

A financial ratio that measures a company's current share price relative to its per-share earnings, used for valuing companies and comparing their financial health.

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the company's profits and assets.

Tempel Corporation

A specific company, possibly identified by its unique business activities, name, or industry sector. Without further context, detailed attributes cannot be provided.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, often used to evaluate the relative value of a company's shares.