(d) What is the optimal tax t* that maximizes the tax revenue R? (e) Suppose the government cares about the worker's after-tax income and maximizes R+ (1 − t)wL. What is the new optimal tax? What is the rela- tionship between wage and the tax? 3. t)wL - - A worker chooses labor supply L to maximize his payoff: (1 L² in which t is the tax rate, w is the wage per hour. The govern- ment chooses a tax rate t to maximize tax revenue R = tWL.
(d) What is the optimal tax t* that maximizes the tax revenue R? (e) Suppose the government cares about the worker's after-tax income and maximizes R+ (1 − t)wL. What is the new optimal tax? What is the rela- tionship between wage and the tax? 3. t)wL - - A worker chooses labor supply L to maximize his payoff: (1 L² in which t is the tax rate, w is the wage per hour. The govern- ment chooses a tax rate t to maximize tax revenue R = tWL.
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
ChapterST2: The Economics Of Social Security
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Problem 6CQ
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