Draw an indifference curve and budget constraint picture where individuals allocate their time between consumption in dollars based on earnings in the labor market and leisure/home production. Given your drawing, label the optimal consumption levels of market goods and leisure/home production. Show the effect of tax on labor earnings. Draw your picture consistent with a small income effect and a large substitution effect?

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I can definitely help you with that Heres a breakdown of the desired picture and the effects of a tax on labor earnings Picture Axes Xaxis Leisure hou... View the full answer