Dudley Has a Utility Function U(C, R)= C - (12

question 51

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 $0 per hour, how many hours of leisure will he choose per day?

• A)9
• B)10
• C)11
• D)13
• E)12

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Definitions:

Quasilinear

Pertaining to equations or functions that are nearly, but not exactly, linear in their behavior or representation.

Betas

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Multifactor Model

Model of security returns positing that returns respond to several systematic risk factors as well as firm-specific influences.

Explanatory Power

The ability of a statistical model to account for the variance in a given data set, explaining how well the model fits or predicts the outcomes.