Q. Alice's utility is given by, x as well as y are goods as well as l is the amount of hours that Alice works. Alice can only spend what she earns by working at her job that pays her $10 per hour as well as by spending her interest income from her trust fund, m > 0.
a. Assume the costs of x as well as y is $12 as well as $48 respectively. What is Alice's budget constraint?
b. Assume m = $240. How much of each good does Alice buy as well as how many hours does she work?
c. Assume m = $1200. How much of each good does Alice buy as well as how much does she work?
d. Assume again that m = $240, but now Assume she makes $20/hr. Does Alice work more or less? Does this seem realistic? Assume m = $240, but she makes $100,000/hr. Does Alice work more or less? Does this seem realistic?