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[HSBU] Suppose that every hour Pax earns 10 USD before tax. Pax can work 8 hours a day and 360 days a year. Draw a
[HSBU] Suppose that every hour Pax earns 10 USD before tax. Pax can work 8 hours a day and 360 days a year. Draw a budget constraint line that shows the trade-off relationship between labor and leisure according to the tax systems below: [i]. A flat tax rate of 20% is levied on all income earned. [ii]. Multilevel tax, whereby the first 10,000 USD will not be taxed, followed by a tax rate of 25% on each income exceeding 10,000 USD. [111]. Multilevel tax: The first 5,000 USD is subject to 10% tax, 20% is levied on the next 10,000 USD, and 30% of the subsequent earnings. [iv]. Pax is the main labor, while Tom is the secondary labor. Ask for an alternative effect or effect Will income be bigger for Pax or Tom when the government raises taxes? Explain
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