Question: 6. As in the Hong Kong tax code, we can think of the representative consumer faces a wage income tax with a standard deduction. That

6. As in the Hong Kong tax code, we can think of the representative consumer faces a wage income tax with a standard deduction. That is, the representative consumer pay no tax on wage income for the first a units of real wage income, and then pays a proportional tax & on each unit of real wage income greater than x. Therefore, the consumer's budget constraint is given by c = w(h - () + a if w(h -() z. To simplify the question: let's assume 7 = 0. Assume Hong Kong government cut proportional tax, analyze the changes on consumption and leisure by using income and substitution effects
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