Households Lowest 20 percent Second 20 percent Third 20 percent Fourth 20 percent Highest 20 percent Market income (millions of dollars) 5 9 20 30 36 Income after tax and benef (percentage of tc income after ta and benefits)
Households Lowest 20 percent Second 20 percent Third 20 percent Fourth 20 percent Highest 20 percent Market income (millions of dollars) 5 9 20 30 36 Income after tax and benef (percentage of tc income after ta and benefits)
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter20: Poverty, Inequality, And Discrimination
Section: Chapter Questions
Problem 5DQ
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Question
Transcribed Image Text:The table shows the distribution of market income.
Suppose that the government redistributes income by
taxing the 60 percent of households with the highest
market incomes 10 percent, then distributing the tax
collected as an equal benefit to the 40 percent with the
lowest market income.
If the people whose market incomes are taxed cut their
work hours and their market incomes fall by 10 percent,
what is the distribution of income after taxes and benefits?
Complete the table to show the new distribution of
income. (Ignore any cost of administrating the
redistribution scheme.)
>>> Answer to 1 decimal place.
Search
Households
Lowest 20 percent
Second 20 percent
Third 20 percent
Fourth 20 percent
Highest 20 percent
Market
income
(millions
of dollars)
5
9
20
30
36
Income after
tax and benef
(percentage of tc
income after ta
and benefits)
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