LO 5 Suppose that a government plans to collect a tax revenue of $50 million to inance

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LO 5 Suppose that a government plans to collect a tax revenue of $50 million to inance government expenditure. The government can choose the proportional tax (t1 or t2) to achieve this objective.

Suppose that t2 is higher than t1.

(a) Which tax rate, t1 or t2, would lead to higher welfare?

(b) Is your answer to part

(a) the Pareto optimum?

(c) If the productivity, z, increases, how will this change your answer to part (a)?

Use a diagram to answer parts

(a) and (b).

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Macroeconomics

ISBN: 9781292215792

6th Global Edition

Authors: Stephen Williamson

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Question Posted: Oct 14, 2024 10:00 AM

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LO 5 Suppose that a government plans to collect a tax revenue of $50 million to inance

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Macroeconomics

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