Income also substitution effects for leisure for jake

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Q. Jake has a before tax wage of $10 and pays an income tax of 20 percent, so t=.20. Elucidate how his budget constraint for work also leisure for one day. Assume Jake's before-tax wage decreases to $8, but tax rate remains constant; Elucidate however, in turns out that Jake still consumes the same amount of leisure. Elucidate how this on graph. So these results seem reasonable? Illustrate what do the results tell you about the relative size of the income also substitution effects for leisure for Jake?

Reference no: EM1320386

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