The government is the monopoly issuer of its currency. There is only one tax period. The economy produces one service only, fighting fires. The only expenditure of the government is paying wages to the fire fighters. Labor hours are not divisible.
Every worker is hired full-time for the entire tax period.
PL-the price of labor is set by the government. The expression indicates that, in order to calculate the amount of dollars necessary to pay taxes, we need to sum the revenue of the sale of quantity Q real goods and services offered by the private sector, where each good Qi is sold for some corresponding price Pi. Figure 1 . Since labor and wages are not divisible, the graph in Figure 1. consists of specific points as opposed to a continuous curve. For example, the government cannot hire 1.5 fire fighters and, under the initial assumption, it cannot offer 2.5 dollars as a price for labor.