6. Use a workleisure diagram that includes nonlabor income to portray an individual who is maximizing utility

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6. Use a work–leisure diagram that includes nonlabor income to portray an individual who is maximizing utility by working, say, eight hours per day. Now compare the labor supply effects of imposing

(a) a lump-sum tax (a tax that is the same absolute amount at all levels of earned income); and

(b) a proportional tax of, say, 30 percent on earned income. Do hours of work rise or fall in each case?

Can you generalize these outcomes to all individuals in the economy? Explain.

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Contemporary Labor Economics

ISBN: 9780073375953

9th Edition

Authors: Campbell McConnell, Stanley Brue, David Macpherson

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Question Posted: Sep 27, 2024 06:00 AM

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6. Use a workleisure diagram that includes nonlabor income to portray an individual who is maximizing utility

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Contemporary Labor Economics

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