Problem #3: Labor Unions (20 points)Sarah is thinking if she should join the labor union in their company. Her utility function isU (c, 1) = (cl)05, where c denotes consumption, and I denotes leisure. She has 16 hours eachday to allocate between work and leisure.1. Given her non-labor income is zero, how many hours will Sarah work at $7 wage/hour?In addition, how much consumption and leisure can she afford, and how much utilitycan she achieve from this?2. If the labor unioh bargains for a $10.5 overtime pay rate for work hours beyond 8hours, will Sarah benefit from this proposal?3. If, instead, the labor union proposes an 8-hour workday, will Sarah benefit from it?

Detailed explanation:Question 1: Work and Utility Calculation Sarah has to decide how many hours to…

Answered: Problem #3: Labor Unions (20 points)…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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