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why not Exercise 13.3 (Moderate) The representative household lives for one period and has preferences over consumption C and labor supply L as follows: U(C, L) = 2VC -L. The government levies a flat tax at rate r and a lump-sum tax of S. Money spent on the lump-sum tax is exempt from the flat tax (that is, the lump-sum tax is paid with pre-tax dollars). The household can transform labor effort into the consumption good at a rate of one-to-one (the wage rate is unity). Answer the following questions: 1. What are the parameters of this tax system? What is the action chosen by the house- hold? 2. Write down the tax system function H(a; ) in this case (replace a with the house- hold's action and