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Taxes during the fourteenth century were very progressive. The 1377 poll tax on the Duke of Lancaster was 520 times the tax on a peasant.

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Taxes during the fourteenth century were very progressive. The 1377 poll tax on the Duke of Lancaster was 520 times the tax on a peasant. A poll tax is a lump-sum (fixed amount) tax per person, which does not vary with the number of hours a person works or how much that person earns. Use a graph to show the effect of a poll tax on the labor-leisure decision. Does knowing that the tax was progressive tell us whether a nobleman or a peasant-assuming they have identical tastes-worked more hours? Time Assume a rich person (or nobleman) initially faces budget line L" , maximizing utility at bundle ey, a poor person (or peasant) initially faces budget line L" , maximizing utility at bundle ey , and the nobleman and peasant have the same tastes and preferences. Then, a poll tax is imposed such that the rich person's budget line becomes L and the poor person's budget line Y, Goods per day becomes L . Notice that the poll tax for the nobleman is larger than the poll tax for the peasant. For simplicity, also assume that the nobleman and peasant face the same wage (such that their budget lines are different only because the nobleman has more unearned income than the peasant). 1.) Using the point drawing tool, identify the optimal bundle for the rich person with the poll tax. Label this point'e? ' 2.) Using the point drawing tool, identify the optimal bundle for the poor person with the poll tax. Label this point'e2. NR N, Leisure hours per day Carefully follow the instructions above, and only draw the required objects

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