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An individual has utility function over income (M) and leisure (L) of U(M,L) = M·L2. The amount of non-labor income is Y, and the individual has T hours available for work or leisure.
a. Write an expression for the budget constraint, and show it in a graph.
b. Derive labor supply as a function of w, T, and Y.
c. Is labor supply increasing or decreasing in w?
d. Suppose T = 16, and Y = 10. What is the person's reservation wage
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