Suppose the consumer's wage is w = 16 but the government imposes income taxes. Specifically, the government imposes a 37.5% tax on labor income. This leaves them with an after-tax wage of w' = 10. How much does the consumer work and consume now? (d) Would this consumer be better or worse off with a lump-sum tax of $48? A lump-sum tax is fixed and so does not depend on the consumer's income. (e)

Suppose the consumer's wage is w = 16 but the government imposes income taxes. Specifically, the government imposes a 37.5% tax on labor income. This leaves them with an after-tax wage of w' = 10. How much does the consumer work and consume now? (d) Would this consumer be better or worse off with a lump-sum tax of $48? A lump-sum tax is fixed and so does not depend on the consumer's income. (e)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 17: For economists, human behaviors influence the choices people make to fulfill their needs, wants or desires. A True B False
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