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Suppose the government provides a proportional income subsidy on the representative consumer's wage income. That is,...

Suppose the government provides a proportional income subsidy on the representative
consumer's wage income. That is, the consumer's wage income is w(1+t)(h-l) where
t is the rate of subsidy. What effect does the income subsidy have on C and l? Explain
your results using income and substitution effects?

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