Question: Rodney has a degree in economics. Being exceptionally studious, Rodney has learnt that all of his desires in life can be summarized by a utility function \(U(c, l)\),where \(c\) is his consumption of goods, and \(l\) is his consumption of leisure. Rodnty always enjoys consuming more of \(c\). However, since he was never taught how to have fun, he finds he only enjoys leisure up to some point \(l^{*}\) (which is below the total amount of time at his disposal), and any additional leisure actually reduces his utility.

1. Sketch Rodney's indifference curves. Explain their shape intuitively.
2. Show that Rodney will always consume less leisure than \(l^{*}\). Explain why.
3. Derek is an entrepreneur. He never got a degree in economics. Derek meets Rodney and decides to offer him a job with a wage of zero. Would Rodney ever accept such an offer? If so, how many hours will Rodney work?
4. Derek gets tired of Rodney being around all the time and moves away. It takes \(t\) hours at a cost of \(m\) dollars for Rodney to go and continue working for Derek. Despite this, and much to Derek's chagrin, Rodney continues to "work" for Derek. Why?

Price: $2.99

Solution: The downloadable solution consists of 3 pages
Deliverable: Word Document