! (asap) Consider a representative consumer withgeneric utility function U(C,l) and h hoursavailable, some of which are used as leisure(1). Hours of work are paid at w, and there isprofit income Tt and a lump-sum tax T, withT > Tt.a) Write down the consumer budgetconstraint and represent it in a graph. Whatchanges in terms of the budget constraint ifwe now impose that T< Tt? Motivate youranswer.b) With respect to point (a), i.e. T< r, whathappens to the slope of the budgetconstraint when the government imposes aproportional tax on wage income? Is therepresentative consumer now better orworse off?

The utility function reflects the consumer's preferences in leisure and consumption. The consumer's…

Consider a representative consumer with generic utility function U(C,I) and h hours available, some of which are used as leisure (1). Hours of work are paid at w, and there is profit income and a lump-sum tax T, with T> π. a) Write down the consumer budget

Consider a representative consumer with generic utility function U(C,I) and h hours available, some of which are used as leisure (1). Hours of work are paid at w, and there is profit income and a lump-sum tax T, with T> π. a) Write down the consumer budget

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

! (asap)

Consider a representative consumer with
generic utility function U(C,l) and h hours
available, some of which are used as leisure
(1). Hours of work are paid at w, and there is
profit income Tt and a lump-sum tax T, with
T > Tt.
a) Write down the consumer budget
constraint and represent it in a graph. What
changes in terms of the budget constraint if
we now impose that T< Tt? Motivate your
answer.
b) With respect to point (a), i.e. T< r, what
happens to the slope of the budget
constraint when the government imposes a
proportional tax on wage income? Is the
representative consumer now better or
worse off?

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