• Use a labor-leisure choice analysis to answer the following:

a. Andy derives utility from consuming leisure (N) and an all-other-goods (AOG) that he purchases from the wage income earned by working (H). His hourly wages are $w. Using an indifference curve- budget line framework show his initial combination of N (hence the number of hours worked) and AOG per day.

b. Suppose a tax is imposed on his hourly wages, t. How would his change the labor-leisure choices per day? Explain in words and show graphically, using the same graph used in part a.

c. Decompose the total price effect of the effect of a tax into the substitution and income effect, assuming that Joe treats leisure as a normal good.

d. Derive the corresponding demand for leisure curve for Joe.

e. Derive the corresponding supply for labor curve for Joe.

Draw a graph for part a, b, and c

Draw a graph for part d

Draw a graph for part e