Question: Please help me with below question. Assume that output (Y) in the economy is given by a Cobb-Douglas production mction, Y = zKN 1' where

Please help me with below question.

Please help me with below question. Assume that output (Y) in the

Assume that output (Y) in the economy is given by a Cobb-Douglas production mction, Y = zK\"N 1'\" where 2 represents total factor productivity, K is the xed capital stock, and N is labor. Utility is given by U =ln(C) + blnl,b > 0 where C is consumption, and 1 denotes leisure. Government collects taxes by taxing the rm's revenue at a at rate oft. (After-tax revenue for the rm is (1 t) Y). The government uses the tax to md its expenditure G = tY, and consumers do not value G. Assume that initially G = W = GI a) Household Problem: Write the equation for the household budget constraint as a function of leisure. Assuming that the household takes the wage (W1) and prots (7:1) as given, draw a graph of the household's optimization problem, with c on vertical axis and l on horizontal, denoting optimal values of consumption and leisure with subscript 1 ( 1 ). Label everything, including intercepts. What is the slope of the budget constraint? (15 points)

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