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

 

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The representative firm has a production function Y representative household utility function is = 30N. The u(c, l | g) = ln(c+ 0.5g) + 2.5 ln(l) 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 government revenue? The representative firm has a production function Y representative household utility function is = 30N. The u(c, l | g) = ln(c+ 0.5g) + 2.5 ln(l) 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 government revenue?