2. George views leisure as a normal good. He works at a job that pays w an hour. Use a labor-leisure analysis to compare the effects on the hours he works from a marginal tax rate on his wage, v, or a lump sum tax, 7. If the per-hour tax is used, he works 10 hours and earns (1 - v) 10W. The government sets T = v10W, so that it collects the same amount of money from either tax. Assume that the person receives utility from leisure and money spent on all other goods. Assume price of other goods is $1. a. Draw an indifference curve-budget line graph with leisure on the x-axis and money spent on other goods on the y-axis. i. Identify the choice made with no tax. Label the point of tangency e , the amount of leisure N. and the amount of other goods as Y.. ii. Identify the choice made with the marginal tax rate of v. Label the point of tangency e, the amount of leisure N. and the amount of other goods as Y. 2 iii. Identify the choice made with the lump-sum tax. Label the point of tangency e, the amount of leisure /, and the amount of other goods as Y.! b. Which tax is likely to reduce George's hours of work more? Explain using the substitution and income effect of the taxes. You do NOT have to identify the substitution and income effects in the graph, just provide a verbal discussion