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{"ops":[{"insert":"\nConsider the following\u200b one-period model. Consumer Utility function over consumption\u200b (C) and leisure\u200b (L) \u200b U(C,L) = Total\u200b hours: H\u200b = 40 Labour\u200b hours: \u200b= H\u200b \u2013 L \u200bNon-labour income:\u200b \u03c0 \u200bLump-sum tax: T Hourly\u200b wage: w Firm Production\u200b function: Y\u200b = \u200bzF(\u200b) \u200b= z Total factor\u200b productivity: z\u200b = 2 Government Government spending\u200b (exogenous): G\u200b = 20 Suppose that the total factor\u200b productivity, z, increases to 5. What is the income effect of this wage change on labor \u200bsupply(\u200b)?\u00a0A. \u200b-5.51 B. \u200b+8.51 C. \u200b-8.51 D. \u200b+5.51 E. None of the above\n"}]}
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