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作业三
1.Suppose that the government subsidizes employment. That is, the government
pays the firm s units of consumption goods for each unit of labor that the firm hires. Determine the effect of this subsidy on the firm’s demand for labor and show it in a diagram.
2. A consumer receives income y in the current period, income y’ in the future period,
respectively. The consumer can borrow and lend at the real interest rate r. This consumer faces a constraint on how much he or she can borrow, much like the credit limit typically placed on a credit card account. That is, the consumer cannot borrow more than x, where x 3.Suppose that the government imposes a proportional income tax on the representative consumer’s wage income. That is, the consumers wage income is w(1-l)(1-t), where t is the tax rate and l is the leisure time. What effect does the income tax have on consumption and labor supply? Explain your results in terms of income and substitution effects.