Question: Alice’s utility function is U(C, L) = C^1/2 L^1/3. Her wages are $15 and she has 20 hours to allocate between work and leisure. Her non-labor income is $30.

a. Find her utility maximizing combination of labor and leisure.

b. Find her utility maximizing combination of labor and leisure when non-labor income is zero.

c. On one graph, clearly label all your answers from parts a and b.

d. On the graph, show which effect dominates, the substitution effect or income effect when non-labor income goes from $30 to $0. Very briefly explain.