I tried to do QUESTION 3, 1) To find equilibrium W (wage ) & pi (profit).

I did was,

• MRS=MPN
• C+G=Y

Then I solve the MRS ( by taking partial derivative), MRS= (h-L)^1/2.

After, MPN= z(N)=> (1) N. The N (labour) can be replaced by N=1-L.

MRS= MPN,

(h-L)^1/2= N

L*= -(N^2 -h). Now I'm stuck, I want to find the equilibrium W & Pi, but I don't know how?

I know MRS=MPN =W & to find profit= y-WN.

So, I need to find the N (labor), but I don't know how?

2) The equilibrium depends on t, I'm stuck there as well.

ECON 303~ FINAL EXAM REVIEW.pdf 7 Adobe Acrobat Reader DC (32bit) File Edit View Sign Window Help Home Tools ' ECON 303~ TUTOR,,, lirGEEDQ ECON 303~ TEXTBM ' ECON 303~ FINAL X @@2/4k@@125%vv?a4mf> H' p Type hereto search period 0 is zero. Question III [20 points] Consider an economy in which the representative consumer preferences are described by U(C,l) = 0 (h 0%. The total number of hours available to the representative consumer is h : 17 and the market real wage is w. The representative rm produces the nal consumption good using the technology function Y = 2N Where N is the labour, and z = 1. The consumer pays a proportion t of his income as tax and receives a dividends 7r from the rm. 1' What are the equilibrium values of w and 71'? [05 points] 2. Find the equilibrium leisure 1*. [08 points] Hinthour answer may depend on t. 3. Find the t that maximizes the governments revenue? [07 points] (D! X Sign In (3.1230 ENG lNTL 4