Suppose that the government redistributes income by taxing the 60 percent of households with the highest market

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Suppose that the government redistributes income by taxing the 60 percent of households with the highest market incomes 10 percent, then distributing the tax collected as an equal benefit to the 40 percent with the lowest market income.

Calculate the distribution of income after taxes and benefits and draw the Lorenz curve

(i) Before taxes and benefits and

(ii) After taxes and benefits.

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Foundations Of Economics

ISBN: 9780135897478

9th Edition

Authors: Robin Bade, Michael Parkin

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Question Posted: Jan 06, 2023 12:17 AM

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Suppose that the government redistributes income by taxing the 60 percent of households with the highest market

Question:

Households Lowest 20 percent Second 20 percent Third 20 percent Fourth 20 percent Highest 20 percent Market income (percentage) 5 9 20 30 36

Step by Step Answer:

For simplicity assume that the total income is 100 so that the percentages given in the pro...View the full answer

Foundations Of Economics

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