Characterize the equilibrium in the labor market. That is, find the labor supply and de- mand curves and calculate the equilibrium wage and amount of hours worked as a function of productivity At and the other parameters of the model. [Hint: the worker's labor choice (conditional on consumption) is static. You can greatly simplify your algebra by first calcu- lating the worker's labor supply choice as a function of wt and ct and then imposing the goods market clearing condition ct = yt = Atht to calculate the equilibrium ht.]
