Consider the followingone-period, closed-economy model.

Utility function over consumption(C) and leisure(L)

U(C,L) = C13L13

Totalhours: H= 40

Labourhours: NS = H- L

Government expenditure= 30

Lump-sum tax= T

Productionfunction: Y= zND

Total factorproductivity: z= 4

The representative consumer maximizesutility, the representative firm maximizesprofit, and the government balances budget. Suppose there is an decrease in total factorproductivity, z, to 3. What is the total effect of this on laboursupply?

A. +1.25

B. +3.76

C. -2.51

D. None of the above

E. Cannot be determined from the information given