The representative firm has a production function Y = 30N. The representative household utility function is...

  

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The representative firm has a production function Y = 30N. The representative household utility function is u(c,l | g) = ln(c + 0.5g) + 2.5 ln(e) Based on the above utility function, 50% of government spending is a direct substitute for private consumption. Suppose that g = 1. The government collects a flat-rate labor income tax with a tax rate of T = = 10%. At the equilibrium, what is the optimal amount of consumption for the representative household? Activate W Go to Settings The representative firm has a production function Y = 30N. The representative household utility function is u(c,l | g) = ln(c + 0.5g) + 2.5 ln(e) Based on the above utility function, 50% of government spending is a direct substitute for private consumption. Suppose that g = 1. The government collects a flat-rate labor income tax with a tax rate of T = = 10%. At the equilibrium, what is the optimal amount of consumption for the representative household? Activate W Go to Settings