Gen Combo Microeconomics; Connect Access Card
21st Edition
ISBN: 9781260044874
Author: MCCONNELL CAMP
Publisher: MCG
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Chapter 5, Problem 1P
Sub part (a):
To determine
The number of supervisors.
Sub part (b):
To determine
The number of supervisors.
Sub part (c):
To determine
The number of supervisors.
Sub part (d):
To determine
The number of workers.
Sub part (e):
To determine
The number of workers.
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Suppose George made $20,000 last year and that he lives in the country of Harmony. The way Harmony levies income taxes, all
citizens must pay 10 percent in taxes on their first $10,000 in earnings and then 50 percent in taxes on anything else they might earn.
Given that George earned $20,000 last year, his marginal tax rate on the last dollar he earns will be
rate for his entire income will be
and his average tax
O 10 percent; 50 percent
O 50 percent; less than 50 percent
O 10 percent; less than 50 percent
O 50 percent; 50 percent
5. LO 4 Suppose, as in the federal income tax code
for the United States, that the representative con-
sumer faces a wage income tax with a standard
deduction. That is, the representative consumer
pays no tax on wage income for the first x units of
real wage income, and then pays a proportional
taxt on each unit of real wage income greater than
x Therefore, the consumer's budget constraint
given by C wh -D + if wh- D=x., or
C (1-wh-D+ tx+ if_wCh = D2
Now, suppose that the government reduces
tax deduction x Using diagrams, determine the
effects of this tax change on the consumer, and
explain your results in terms of income and sub
stitution effects. Make sure that you consider two
cases. In the first case, the consumer does not pay
any tax before x is reduced, and in the second
case, the consumer pays a positive tax before x
is reduced
PROBLEMS 1. Workers are compensated by firms with “benefits” in addition to wages and salaries. The most prominent benefit offered by many firms is health insurance. Suppose that in 2000, workers at one steel plant were paid $20 per hour and in addition received health benefits at the rate of $4 per hour. Also suppose that by 2010 workers at that plant were paid $21 per hour but received $9 in health insurance benefits. LO17.1
By what percentage did total compensation (wages plus benefits) change at this plant from 2000 to 2010? What was the approximate average annual percentage change in total compensation?
By what percentage did wages change at this plant from 2000 to 2010? What was the approximate average annual percentage change in wages?
If workers value a dollar of health benefits as much as they value a dollar of wages, by what total percentage will they feel that their incomes have risen over this time period? What if they only consider wages when calculating their incomes?…
Chapter 5 Solutions
Gen Combo Microeconomics; Connect Access Card
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Similar questions
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