A Cab Service Company employs 8 drivers. Each driver is able to serve 20 clients per hour worked. Working hours are flexible, so that each driver is free to choose how many hours she wants to work. For each driver, the effort cost of working is 5h2, where h is the number of hours worked by this driver. The cab company pays each driver a bonus b for each client served by that driver. Each driver's utility equals her own income minus the effort cost of working. Each driver chooses the number of hours that maximize her own utility. The cab company charges each client a price P=52. In addition to the bonus paid to drivers, the company also incurs an operational cost equal to 0.005Q2, where Q is to total quantity of clients served by the whole company (Hint: use q to represent the number of clients served by each driver, and Q to represent the total number of clients served by the whole company). The timing of the game is the following: 1) The Cab Company announces the bonus b it will pay drivers for each client served. 2) Each driver then chooses how many hours she will work. Given this information, answer the following questions: a) The best response function of each driver is

A Cab Service Company employs 8 drivers. Each driver is able to serve 20 clients per hour worked. Working hours are flexible, so that each driver is free to choose how many hours she wants to work. For each driver, the effort cost of working is 5h2, where h is the number of hours worked by this driver. The cab company pays each driver a bonus b for each client served by that driver. Each driver's utility equals her own income minus the effort cost of working. Each driver chooses the number of hours that maximize her own utility. The cab company charges each client a price P=52. In addition to the bonus paid to drivers, the company also incurs an operational cost equal to 0.005Q2, where Q is to total quantity of clients served by the whole company (Hint: use q to represent the number of clients served by each driver, and Q to represent the total number of clients served by the whole company). The timing of the game is the following: 1) The Cab Company announces the bonus b it will pay drivers for each client served. 2) Each driver then chooses how many hours she will work. Given this information, answer the following questions: a) The best response function of each driver is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7. An individual's utility function is given by U =1000x, +450x, +5 x,x, -2x - x where x, is the amount of leisure measured in hours per week and x, is income earned measured in cedis per week. Determine the value of the marginal utilities, when x, = 138 and x, = 500. Hence estimate the change in utility if the individual works for an extra hour, which increases earned income by GH¢15 per week. Does the law of diminishing utility hold for this function?
An individual’s utility function is given by where is the amount of leisure measured in hours per week and is income earned measured in cedis per week. Determine the value of the marginal utilities, when = 138 and = 500. Hence estimate the change in utility if the individual works for an extra hour, which increases earned income by GH¢15 per week. Does the law of diminishing utility hold for this function?
cook -int ences a) Chika has calculated the marginal utility that she derives from her paid employment and from leisure. This is presented in table below. In her ideal world, where she could work as few or as many hours as she wished, how would she allocate her sixteen waking hours? (She does need to sleep.) Hours 1 2 3 4 5 6 7 8 9 10 MU Paid Employment 80 75 70 65 60 55 50 45 40 35 MU Leisure 120 110 100 90 80 70 60 50 40 30 9 hours working and 40 hours leisure. b) Unfortunately, Chika begins to realize that unless she gets an education she will not enjoy a high salary and therefore, will not be able to afford more leisure time. She therefore decides to spend six hours each day studying (in addition to her eight hours of sleep). How will she now divide the remaining hours between work and leisure?! hours working and hours leisure. Help Save C
This question will analyze the impact on a person's labour supply from a shock to their partner's job. Assume leisure is a normal good. Let's assume Vanessa has a wage rate of $20 per hour. Recently her partner, Bill, had to take a wage cut at work, with his wage falling from $45 per hour to $30 per hour, but allowed them to continue working 40 hours per week. Analyze the decision of the household over choice consumption and Vanessa's leisure, taking Bill's hours as given (constant).
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2) Explain how utility could be used in a decision where performance is not measuredby monetary value.
1) Sharon spends her time (20h) between leisure (L) and work and he consume Y product from his working income (Py=1). Assume that she gets W$ per hour of working and has the following utility function: U (L, Y) =LY+2L C. vv). e. VS What will happen to L, Y and H if the wage per hour (W) will decrease? d. How would your answer to the previous question (c) will change if Sharon has a fixed amount of money (Wo) that is not connected to W? If Sharon has the following utility function: U= L³+ Y², is it possible that she will choose not to work at all? Explain and show the condition for your result if exists. |||
a) Chika has calculated the marginal utility that she derives from her paid employment and from leisure. This is presented in table below. In her ideal world, where she could work as few or as many hours as she wished, how would she allocate her sixteen waking hours? (She does need to sleep.) Hours 1 2 3 4 5 6 7 8 9 10 MU Paid Employment 105 95 85 75 65 55 45 35 25 15 MU Leisure 100 90 80 70 60 50 40 30 20 10 hours working and b) Unfortunately, Chika begins to realize that unless she gets an education she will not enjoy a high salary and therefore, will not be able to afford more leisure time. She therefore decides to spend six hours each day studying (in addition to her eight hours of sleep). How will she now divide the remaining hours between work and leisure? hours working and hours leisure. hours leisure.