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Unformatted text preview: solve the consumers optimal consumption C , leisure l, and labor supply N S as functions of h, w, t, and . (d) Assume that h = 5000 hours, = $30000, w = $10 /hour , and and t = 0 . 25 . Calculate the optimal consumption, leisure, and labor supply for the consumer. (e) Now assume that the tax rate is increased to t = 0 . 50 . Calculate the new values consumption, leisure, and labor supply. What happened to these variables as a result of the tax increase. 3. Repeat question (2) above assuming that the representative consumers utility function is given by U ( C,l ) = C . 3 l . 7 . 1...
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This note was uploaded on 02/04/2011 for the course ECON 320L taught by Professor Kuruscu during the Fall '08 term at University of Texas at Austin.
 Fall '08
 KURUSCU
 Macroeconomics, Utility

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