Consider a person who like consumption (C) and dislikes labo…
Consider a person who like consumption (C) and dislikes labor (N) in this way: U = ln(C) – N This is a one-period model of course. The person gets to consume by earning wages and by getting a “national dividend” (D) from the government. To keep it simple, we’ll assume that one hour of work yields an one extra unit of the consumption good. C = N + D This person maximizes utility subject to the above budget constraint. Question: For this person, if the national dividend (D) rises by one unit, how much does total consumption (C) change as a result? In other words, what is dC*/dD for this person? Answer with a number. If you think dC*/dD is 7, write 7.