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Suppose income tax rates are reduced. As a result, Smith works more hours per week while Jones works fewer hours per week. We can conclude
Suppose income tax rates are reduced. As a result, Smith works more hours per week while Jones works fewer hours per week. We can conclude that Multiple Choice Smith and Jones are in different tax brackets. for Smith, the substitution effect exceeds the income effect; the opposite is true for Jones. for Jones, the substitution effect exceeds the income effect; the opposite is true for Smith. Jones conforms to the economic model of labor supply but Smith does not
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