In this graph, the market-clearing conditions aren't enforced. Play around with the real wage and see how there is only one wage at which the Producer's and Consumer's Decisions align.

\(K\):

\(z\):

\(\alpha\):

\(h\):

\(G\):

\(w\):

\(N_d\):

\(N_s\):

\(Y\):

\(\pi\):

\(C\):

\(l\):

\(U\):

- The firm solves \[\max_{N_s}\left[ zK^\alpha N_d^{1-\alpha} - wN_s\right]\]
- The consumer solves \[\max_{C,l}\;\left[\ln C + \ln l\right]\] subject to the constraints: \begin{gather} c\geq 0, \quad \quad h \geq l \geq 0 \tag{NonNeg}\\ c \leq w\cdot(h-l) + \pi - T \tag{Budget}\\ \end{gather}