Question
Y6 11. You graduate from college and take a job at a consulting firm with a wage of $25 per hour. Your job is extremely
Y6
11. You graduate from college and take a job at a consulting firm with a wage of $25 per hour. Your job is extremely flexible: you can choose to work any number of hours from 0 to 2,000 per year.
Suppose that there is an income tax of the following form:
Income up to $10,000: no tax
Income from $10,000 to $30,000: 20% tax rate
Income from $30,000 up: 30% tax rate
If you were to draw a graph in leisure (good x)/income (consumption - good y) space, showing your opportunity set with the tax system in place, find the following specific points on the graph. Be careful to submit your answers in the following format (x, y).
a. Work 0 hours?
b. Work 400 hours?
c. Work 1200 hours?
d. Work 2000 hours?
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