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27) Consider the following consumer's problem facing a proportional income tax. Utility function over consumption (C) and leisure (L) U(C,L) = C2/3 1 1/3 Total

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27) Consider the following consumer's problem facing a proportional income tax. Utility function over consumption (C) and leisure (L) U(C,L) = C2/3 1 1/3 Total hours: H = 30 Labour hours: NS = H - L Proportional income tax rate = 0.1 Production function: Y = zND Total factor productivity: z = 2 The representative consumer maximizes utility, the representative firm maximizes profit, and the government balances budget. What is the tax revenue at equilibrium? A) 0 B2 4 D) E) None of above

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