B. Suppose that, as in our treatment of wage taxes, tastes over consumption c and leisure ,

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B. Suppose that, as in our treatment of wage taxes, tastes over consumption c and leisure , can be represented by the utility function u1c, ,2 5 c a

, 112a2 and that all workers have leisure endowment of L

(and no other source of income). Suppose further that, again as in the text, the equilibrium wage in the absence of distortions is w* 5 25.

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