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3. If a consumer's utility function is u = C04/02 and the budget constraints are / + NS - 18, C = w.NS +50 -T,
3. If a consumer's utility function is u = C04/02 and the budget constraints are / + NS - 18, C = w.NS +50 -T, then what should be the consumer's labour supply? Derive mathematically and explain the graph. [Notations have their usual meaning.] Now, if tax increases by AT, then how would the labour supply change? Explain the intuition after the derivation. 3+2 = 5
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