Terrys utility function over leisure l and other goods yis


Terry's utility function over leisure (L) and other goods (Y)is U(L, Y) = Y + LY. The associated marginal utilities areMUy = 1 +Land MUL = Y. He purchases other goods at aprice of $1, out of the income he earns from working. Showthat, no matter what Terry's wage rate, the optimal number ofhours of leisure that he consumes is always the same. Whatis the number of hours he would like to have for leisure?

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