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Suppose that the labor supply in an economy is L=atw-10 and the atw can be calculated as follows: atw=(1-t)w. atw = after tax wage, w
Suppose that the labor supply in an economy is L=atw-10 and the atw can be calculated as follows: atw=(1-t)w. atw = after tax wage, w = wage rate, t = tax rate. a) Which tax level would maximize the tax revenues? b) When would the tax revenues be equal to zero? c) Suppose the wage rate (w) in this economy is 50 and the current tax rate (t) is 50%. What would you advice the government
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