Mr.Cog has 18 hours per day to divide between labor and leisure.His utility function is U(C, R)= CR, where C is dollars per year spent on consumption and R is hours of leisure.If he has 19 dollars of nonlabor income per day and gets a wage rate of 15 dollars per hour when he works, his budget equation, expressing combinations of consumption and leisure that he can afford to have, can be written as
A)15R + C = 19.
B)15R + C = 289.
C)R + C/15 = 379.
D)C =289 +15R.
E)C = 346 + 15R.

Question

Quizplus · Accepted Answer

Mr. Cog has 18 hours per day, so if he works, he earns 15 dollars per hour. His total potential earnings from labor are 15 * (18 - R). Adding his nonlabor income of 19 dollars, his total consumption C is given by C = 15 * (18 - R) + 19, which simplifies to 15R + C = 289.

MrCog Has 18 Hours Per Day to Divide Between Labor