Part 1: Illustrate general equilibrium and the Laffer curve in the context of a repre-sentative consumer with a utility function:U(C,1) = In(C) + In(1)that he or she maximises subject to a constraint:C= w(1- t)(h – 1) + *where w, h,1, C, t and r are wages, hours of time available, leisure, eonsumption, tax rate,and dividend income. The production function for this economy is given byY = C+G = A(h – 1)/2Assume that h = 1, A = 1 and that the government has a balanced budget.(a) Find the equilibrium by matching the Marginal Rate of Substitution to the MarginalRate of Transformation and then substitute into the constraint. Also take intoaccount that profits are non-zero for this setup.(b) Plot the government tax revenue for 0

Utility function : U = ln(C) + ln (L) C = w(1-t)(h - L) + p (Budget Constraint ) (we take pie…

Illustrate general equilibrium and the Laffer curve in the context of a repre- sentative consumer with a utility function: U(C,1) = In(C) + In(1) that he or she maximises subject to a constraint: C = w(1 - t)(h – 1) +* where w,h,l,C, t and a are wages, hours of time available, leisure, gonsumption, tax rate, and dividend income. The production function for this economy is given by Y = C+G = A(h – 1)/2

Illustrate general equilibrium and the Laffer curve in the context of a repre- sentative consumer with a utility function: U(C,1) = In(C) + In(1) that he or she maximises subject to a constraint: C = w(1 - t)(h – 1) +* where w,h,l,C, t and a are wages, hours of time available, leisure, gonsumption, tax rate, and dividend income. The production function for this economy is given by Y = C+G = A(h – 1)/2

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter21: Demand: Consumer Choic

Section: Chapter Questions

Problem 16E

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