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Suppose a Person's Utility for Leisure (L)and Consumption (Y)can Be

Question 19

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Suppose a person's utility for leisure (L)and consumption (Y)can be expressed as U = Y + L⁰.⁵.Show what happens to the person's labor supply curve when the income tax is cut from 70 % to 30 %.Denote hours worked as H and wage per hour as w.

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Since Y = net income,U = w(1 - t)H + (24...

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