Suppose that the government introduces an EITC such that for the first $8,000 in earnings, the government pays 50¢ per dollar on wages earned. For the next $3,000 of earnings, the credit is held constant at $4,000, and after that point, the credit is reduced at a rate of 20¢ per dollar earned. When the credit reaches zero, there is no additional EITC. Furthermore assume a worker who can work up to 4,000 hours per year at an hourly wage of $10 per hour. 1. The benefit of EITC will disappear at how many hours of leisure? (use just numbers) 2. When the EITC disappears how much does the worker get to consume (do not use $ sign)
Suppose that the government introduces an EITC such that for the first $8,000 in earnings, the government pays 50¢ per dollar on wages earned. For the next $3,000 of earnings, the credit is held constant at $4,000, and after that point, the credit is reduced at a rate of 20¢ per dollar earned. When the credit reaches zero, there is no additional EITC. Furthermore assume a worker who can work up to 4,000 hours per year at an hourly wage of $10 per hour. 1. The benefit of EITC will disappear at how many hours of leisure? (use just numbers) 2. When the EITC disappears how much does the worker get to consume (do not use $ sign)
Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
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
Chapter4: Demand And Demand: Applications And Extensions
Section: Chapter Questions
Problem 12CQ
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Suppose that the government introduces an EITC such that for the first $8,000 in earnings, the government pays 50¢ per dollar on wages earned. For the next $3,000 of earnings, the credit is held constant at $4,000, and after that point, the credit is reduced at a rate of 20¢ per dollar earned. When the credit reaches zero, there is no additional EITC. Furthermore assume a worker who can work up to 4,000 hours per year at an hourly wage of $10 per hour.
1. The benefit of EITC will disappear at how many hours of leisure? (use just numbers)
2. When the EITC disappears how much does the worker get to consume (do not use $ sign)
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