Dudley, Has a Utility Function U(C, R)= C -

question 11

Multiple Choice

Dudley, 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 $20 per day and is paid a wage of $8 per hour, how many hours of leisure will he choose per day?

• A)7
• B)6
• C)9
• D)5
• E)8

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Definitions:

National Debt

The total amount of money that a country's government has borrowed, typically as a result of deficit spending, and yet to repay.

Social Security Tax Surplus

The excess of revenues collected for Social Security over the expenditures on the program.

Crowding-out Effect

A situation where increased government spending leads to a reduction in private sector investment, due to the government borrowing absorbing a larger share of available financial resources.

Expansionary Fiscal Policy

involves government spending and tax cuts to stimulate the economy during a recession.