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1 Taxes and consumption - leisure choice (Ch. 21) Suppose that you can earn $20 per hour before taxes and can work up to 168 hours per week. Consider two income tax rates, 5% and 10%. a. On the same diagram, sketch the two weekly consumption - leisure budget constraints reflecting the two different tax rates. b. Sketch a set of representative indifference curves such that the income effect of the tax increase outweighs the substitution effect. c. Draw a set of representative indifference curves such that the substitution effect of the tax increase outweighs the income effect. Taxes and consumption-leisure choice (Ch. 21) Suppose that you can earn $20 per hour before taxes and can work up to 168 hours per week. Consider two income tax rates, 5% and 10%. a. On the same diagram, sketch the two weekly consumption-leisure budget constraints reflecting the two different tax rates. b. Sketch a set of representative indifference curves such that the income effect of the tax increase outweighs the substitution effect. c. Draw a set of representative indifference curves such that the substitution effect of the tax increase outweighs the income effect.

1 Taxes and consumption - leisure choice (Ch. 21) Suppose that you can earn $20 per hour before taxes and can work up to 168 hours per week. Consider two income tax rates, 5% and 10%. a. On the same diagram, sketch the two weekly consumption - leisure budget constraints reflecting the two different tax rates. b. Sketch a set of representative indifference curves such that the income effect of the tax increase outweighs the substitution effect. c. Draw a set of representative indifference curves such that the substitution effect of the tax increase outweighs the income effect. Taxes and consumption-leisure choice (Ch. 21) Suppose that you can earn $20 per hour before taxes and can work up to 168 hours per week. Consider two income tax rates, 5% and 10%. a. On the same diagram, sketch the two weekly consumption-leisure budget constraints reflecting the two different tax rates. b. Sketch a set of representative indifference curves such that the income effect of the tax increase outweighs the substitution effect. c. Draw a set of representative indifference curves such that the substitution effect of the tax increase outweighs the income effect.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1 Taxes and consumption - leisure choice (Ch. 21) Suppose that you can earn $20 per hour before taxes and can work up to 168 hours per week. Consider two income tax rates, 5% and 10%. a. On the same diagram, sketch the two weekly consumption - leisure budget constraints reflecting the two different tax rates. b. Sketch a set of representative indifference curves such that the income effect of the tax increase outweighs the substitution effect. c. Draw a set of representative indifference curves such that the substitution effect of the tax increase outweighs the income effect. Taxes and consumption-leisure choice (Ch. 21) Suppose that you can earn $20 per hour before taxes and can work up to 168 hours per week. Consider two income tax rates, 5% and 10%. a. On the same diagram, sketch the two weekly consumption-leisure budget constraints reflecting the two different tax rates. b. Sketch a set of representative indifference curves such that the income effect of the tax increase outweighs the substitution effect. c. Draw a set of representative indifference curves such that the substitution effect of the tax increase outweighs the income effect.
Transcribed Image Text:1 Taxes and consumption - leisure choice (Ch. 21) Suppose that you can earn $20 per hour before taxes and can work up to 168 hours per week. Consider two income tax rates, 5% and 10%. a. On the same diagram, sketch the two weekly consumption - leisure budget constraints reflecting the two different tax rates. b. Sketch a set of representative indifference curves such that the income effect of the tax increase outweighs the substitution effect. c. Draw a set of representative indifference curves such that the substitution effect of the tax increase outweighs the income effect. Taxes and consumption-leisure choice (Ch. 21) Suppose that you can earn $20 per hour before taxes and can work up to 168 hours per week. Consider two income tax rates, 5% and 10%. a. On the same diagram, sketch the two weekly consumption-leisure budget constraints reflecting the two different tax rates. b. Sketch a set of representative indifference curves such that the income effect of the tax increase outweighs the substitution effect. c. Draw a set of representative indifference curves such that the substitution effect of the tax increase outweighs the income effect.
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