OilPatch is a mineral rich economy in which the government gets most of its tax revenue from oil royalties. But OilPatch has an income tax. The tables below describe the labor market in OilPatch and the economy's production function. The government introduces an income tax of $2 per hour worked. Use the tables below, determine the after-tax real wage received by workers Labor market Real wage rate (dollars per hour) 10 11 12 13 14 15 $13/hour O $11 hour $10/hour $12/hour Quantity of labor demanded (thousands of hours) 4 2 Quantity of labor supplied (thousands of hours) 3 4 6 Production function Employment (thousands of hours) 2 3 6 7 Real GDP (millions of dollars) 11 15 18 20 21

OilPatch is a mineral rich economy in which the government gets most of its tax revenue from oil royalties. But OilPatch has an income tax. The tables below describe the labor market in OilPatch and the economy's production function. The government introduces an income tax of $2 per hour worked. Use the tables below, determine the after-tax real wage received by workers Labor market Real wage rate (dollars per hour) 10 11 12 13 14 15 $13/hour O $11 hour $10/hour $12/hour Quantity of labor demanded (thousands of hours) 4 2 Quantity of labor supplied (thousands of hours) 3 4 6 Production function Employment (thousands of hours) 2 3 6 7 Real GDP (millions of dollars) 11 15 18 20 21

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following hypothetical income tax brackets for a married couple. Assume for simplicity there are no exemptions or deductions. Income $0-$20,000 $20,000-$50,000 $50,000-$100,000 Over $100,000 Tax Rate 10% 20 45 50 Suppose the couple's income is $70,000. What is the couple's marginal tax rate? The couple's marginal tax rate is 45 percent. (Enter your response as an integer.) What is their average tax rate? The couple's average tax rate is percent. (Enter your response as a real number rounded to one decimal place.)
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