25. True, false or uncertain: the effect of a change in the tax rate on the level of utility of an individual depends on how strongly taxable income of the person adjusts.

27. According to the optimal income tax model that we discussed in class, what does the marginal tax rate for people with high incomes depend on?

28. We showed in class that if there is a person with the highest ability (and, hence, earnings) then the marginal tax rate for that person should be set to zero because of the incentive effect. What other consideration do we need to take into account if ability can be arbitrarily high or we are not going to adjust the tax rate just for the highest ability person?