3. Taxation of Inheritances Consider a representative individual from generation t that lives for one period t and whose utility function is given by U(Ct, It, b) = In(Ct) + In(L - 4) + In(bt ) 2 Where Cf is her consumption level, L is her maximum number of units of labor available, It represents her lifetime labor supplied and by represents the net-of-tax bequests left to the her only child who will live in period t + 1. The individual living in period t faces the following budget constraint: by = (wh - C+ + be_1)R In other words, the bequest she leaves for her child is equal to her lifetime labor income, minus her total consumption plus the initial wealth she had at the start of her life, all that multiplied by R which is a rate that tells us by how much she is able to augment her savings throughout her life?. (a) Set up and solve the utility maximization problem for an individual from the first gener- ation to show that the optimal consumption, labor and net-of-tax bequests for the first generation are C = (Lw + bo), 6 = L - m and bi = "(Lw + bo), respectively."