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Q. Consider a worker with a utility function given by the equation U = , where Y is total income also U is the level of utility. Assume the individual receives no non labor income.
a) Assume to Job a pays $22 per hour also involves working 5 hours per day every day during the year. Illustrate what is level of utility the person will attain on a daily basis? Illustrate what will be the average level of utility attained per day during the year?
b) Assume to Job B pays $22 per hour but involves working 2 hours per day 50 percent (%) of the year also 8 hours per day the other 50 percent (%) of the year. Illustrate what is level of utility the person will attain on a daily basis? Illustrate what will be the average level of utility attained per day during the year?
c) Will the typical worker prefer Job A or Job B?
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As she will be in a lower tax bracket. As her financial advisor, which option do you recommend.
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