Ernie's wage rate is $10 an hour. He has no earnings other than his labor income. His utility function is U(C, L) = CR², where C is the amount of money he spends on consumption, and R is the number of hours a day he spends not working.
a. Write an equation that describes Ernie's budget constraint.
b. How many hours does Ernie choose to work per day?
c. How much money does he spend on consumption per day?

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The Answer of Ernie's wage rate is $10 an hour. He has no earnings other than his labor income. His utility function is U(C, L) = CR², where C is the amount of money he spends on consumption, and R is the number of hours a day he spends not working. a. Write an equation that describes Ernie's budget constraint. b. How many hours does Ernie choose to work per day? c. How much money does he spend on consumption per day?

Ernie's Wage Rate Is $10 an Hour