Question
Consider a competitive equilibrium with proportional taxes on wage income, where the income effect dominates the substitution effect. Then in the competitive equilibrium, (a) MRS`,C
Consider a competitive equilibrium with proportional taxes on wage income, where the income effect dominates the substitution effect. Then in the competitive equilibrium,
(a) MRS`,C < MRT`,C and employment will be lower than what is Pareto optimal.
(b) MRS`,C < MRT`,C and employment will be higher than what is Pareto optimal.
(c) MRS`,C > MRT`,C and employment will be lower than what is Pareto optimal.
(d) MRS`,C > MRT`,C and employment will be higher than what is Pareto optimal.
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The Rise And Fall Of Neoliberal Capitalism
Authors: David M Kotz
1st Edition
0674725654, 9780674725652
