Policymakers of Fakesylvania are considering implementing a national tax scheme.They face two alternatives:

Tax Plan #1

A flat tax of 10% on all labor market earnings.

Tax Plan #2

A head tax where everybody pays $100 per week, regardless of labor force status or income.

a) In the textbox below, compare and contrast the predicted effects of each of these plans on labor supply (i.e. labor force participationandwork

hours), using the standard labor-leisure model.

b) Clearly illustrate the predicted effects of each of these plans with fully-labelled labor-leisure diagrams in your work file.