1) Use the following parameters to sketch twobudget constraints, one with no (or $0) basicpersonal amount (BPA) and one with $1000BPA, in a diagram:i. Assume there is only onetax bracket with income tax rate 50%ii. ŤTimeendowment = 24, wage rate per hour =$100iii. No other deductions and tax credits.Based on your diagram, discuss how theincrease in BPA from $0 to $1000 wouldaffect the labor supply due to the substitutionand income effects.

The microeconomic theory of utility maximisation can also be applied in determination of optimal…

1) Use the following parameters to sketch two budget constraints, one with no (or $0) basic personal amount (BPA) and one with $1000 BPA, in a diagram:i. Assume there is only one tax bracket with income tax rate 50%ii. Time endowment = 24, wage rate per hour = $100iii. No other deductions and tax credits. Based on your diagram, discuss how the increase in BPA from $0 to $1000 would %D offoct tbe labo GLupply due to the su bstitution

1) Use the following parameters to sketch two budget constraints, one with no (or $0) basic personal amount (BPA) and one with $1000 BPA, in a diagram:i. Assume there is only one tax bracket with income tax rate 50%ii. Time endowment = 24, wage rate per hour = $100iii. No other deductions and tax credits. Based on your diagram, discuss how the increase in BPA from $0 to $1000 would %D offoct tbe labo GLupply due to the su bstitution

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 2DQ

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Suppose you are a typical person in the U.S. economy. You pay 4 percent of yourincome in a state income tax and 15.3 percent of your labor earnings in federal payrolltaxes (employer and employee shares combined). You also pay federal income taxes asin Table 2. How much tax of each type do you pay if you earn $30,000 a year? Taking alltaxes into account, what are your average and marginal tax rates? What happens toyour tax bill and to your average and marginal tax rates if your income rises to$60,000?
Suppose a county has a classified property system where owner-occupied property is rated at 15%, farm property and undeveloped land at 10%, and all other property (including rental, commercial, and industrial) rated at 20%. a) What kind of incentives do individuals face when trying to reduce their tax burden? b) Why should it be difficult to compare tax burdens between this city and another city that does not have an unclassified system? Please do not copy paste and explain your answers while answering this question. Other answers on the site about this question are wrong! Thanks!
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Even though many school zones don’t have muchtraffic and aren’t regularly monitored by the policefor speed, most drivers are very careful to driveat or below speed limits when near schools. Whymight this be the case even in the absence of stronggovernment intervention?
Suppose there is a 20% tax on the first $20,000 of taxable income, a 30% tax on taxable income above $20,000 until $35,000, and a 40% tax on all taxable income above $35,000. There is a $3,000 exemption per person in a family. What is the marginal tax rate for a single mother making $35,000 who has one child? a.30% b.40% c.10% d.20%
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Your professor has decided that, from now on, students who receive less than a 60 percent grade onany exam will be eligible to go to a review session. Ifthey attend the session, they will receive an extra 10percent on their grade. You see a problem with thispolicy, and instead propose to your professor thatpeople who go to the review session should receive50 percent of the difference between their grade and60 percent. Explain why this situation represents atrade-off between equity and efficiency