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4. A worker derives utility from consumption c and leisure l and chooses how many hours L to work. She faces the following budget constraint:
4. A worker derives utility from consumption c and leisure l and chooses how many hours L to work. She faces the following budget constraint: c=(1)L+v, where 00. The worker chooses L to maximize her utility which is determined as log(c)+log(l). Determine optimal labour supply L. How does it depend on the tax rate if v=0 ? Explain the result. How does the labour supply depend on the tax rate if v>0. (5p.)
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