Pierre has h = 1 units of time to divide between working and enjoying leisure. For each hour worked, he receives w = 1 units of the consumption good. Suppose that Pierre's preferences are described by the the utility function U(C, l) = C 2/3 l 1/3 . Pierre also owns shares in a factory which gives him an additional = 0.125 units of income. The government in this economy taxes labour income only and uses the proceeds to buy consumption goods that are given to the army. Pierre pays a lump sump tax equal to 0.35.

1. Write down Pierre's budget constraint.

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