**Problem Set 7 is due at the beginning of class on Thursday, November 3.**1. Consider the income tax schedule in Table 1. Does this represent a progressive tax code, a regressive tax code, or neither? **Table 1: Tax Code Question** | Income | Income Tax Rate | |------------------|-----------------| | $0 to $9999 | 10% | | $10000 to $50000 | 10% | | above $50000 | 10% |2. Table 2 provides information on income levels and associated life satisfaction scores (on a scale of 1-10). Answer the following: - Suppose that there were two families in the economy, one earning $15,000 per year and the other earning $80,000 per year. What is total life satisfaction in this economy? - Now suppose that the government decides to transfer $10,000 from the high-income family to the low-income family. What is the new life satisfaction score for the low-income family? What about for the high-income family? What is total life satisfaction in the economy? - Now consider that the transfer mechanism that the government uses is plagued with “Leaky Bucket” issues, and while they still take $10,000 from the high-income family, only $5,000 gets to the low-income family. What is total life satisfaction in the economy now? - If the “Leaky Bucket” effect is real in this case, is it still desirable (from a utilitarian perspective) to implement the transfer? **Table 2: Redistribution Question**This table presents data on income levels and corresponding life satisfaction scores. The income is listed in increasing increments of $5,000, starting from $10,000 to $100,000. Life satisfaction is scored numerically, with higher numbers indicating greater satisfaction. Here is the complete data set from the table:| Income | Life Satisfaction ||----------|-------------------|| $10,000 | 5.52 || $15,000 | 5.65 || $20,000 | 5.79 || $25,000 | 5.92 || $30,000 | 6.04 || $35,000 | 6.16 || $40,000 | 6.27 || $45,000 | 6.38 || $50,000 | 6.49 || $55,000 | 6.59 || $60,000 | 6.68 || $65,000 | 6.77 || $70,000 | 6.86 || $75,000 | 6.94 || $80,000 | 7.01 || $85,000 | 7.08 || $90,000 | 7.14 || $95,000 | 7.21 || $100,000 | 7.27 |**Analysis:**The data suggests a positive correlation between income and life satisfaction, with life satisfaction scores increasing as income rises. This trend is consistent across the entire income range presented in the table. This information can be useful for studying the impact of income on overall well-being and for policy-making in relation to income redistribution.

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1. Consider the income tax schedule in Table 1. Does this represent a progressive tax code, a regressive tax code, or neither? Table 1: Tax Code Question Income $0 to $9999 $10000 to $50000 above $50000 Income Tax Rate 10% 10% 10%

1. Consider the income tax schedule in Table 1. Does this represent a progressive tax code, a regressive tax code, or neither? Table 1: Tax Code Question Income $0 to $9999 $10000 to $50000 above $50000 Income Tax Rate 10% 10% 10%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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