In the country of Utopia, workers pay a 30% tax rate on all income earned. The government is now considering lowering the marginal tax rate to 20%.

A ) Draw a typical budget constraint for a Utopian worker who earns a wage rate w, before and after the change in the tax system.

B ) Will the change in the tax system increase the fraction of Utopian workers who work a positive amount of hours?

C ) Will the change in the tax system increase the number of hours worked for workers who, prior to the reform, worked a positive amount of hours?

D ) Is it possible that the change in the tax system raises government revenue from taxes? In your answer, distinguish between the amount of revenue collected from workers who prior to the reform did not work, and from those who prior to the reform did work.