Assume that workers whoses are less than $8000 currently pay no federal income taxes. Suppose a new government program guarantees each worker $4000, whether or not he or she earns any income. For all earned income up to $8000, the worker must pay a 50- percent tax. Draw the budget line facing the worker under this new program. Using the line drawing tool, draw the new budget line facing a worker whose wage is such that his or her pre-tax earned income is less than $8000. Label this line 'BC2'.
Assume that workers whoses are less than $8000 currently pay no federal income taxes. Suppose a new government program guarantees each worker $4000, whether or not he or she earns any income. For all earned income up to $8000, the worker must pay a 50- percent tax. Draw the budget line facing the worker under this new program. Using the line drawing tool, draw the new budget line facing a worker whose wage is such that his or her pre-tax earned income is less than $8000. Label this line 'BC2'.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assume that workers whoses are less than $8000 currently pay no federal income taxes. Suppose a new government program guarantees each worker $4000, whether or not he or she earns any income. For all earned income up to $8000, the worker must pay a 50- percent tax. Draw the budget line facing the worker under this new program. Using the line drawing tool, draw the new budget line facing a worker whose wage is such that his or her pre-tax earned income is less than $8000. Label this line 'BC2'.
Transcribed Image Text:12000,
11000-
10000-
9000BC
8000-
7000-
6000-
5000-
4000-
3000-
2000-
1000-
22 24
10 12 14 16' 18 20
Hours of leisure
Income (dollars per day)
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