You graduate from college and take a job at a consulting firm with a wage of $25/hour. Your job is extremely flexible: you can choose to work any number of hours from 0 to 2,000 per year.Suppose there is an income tax of the following form: Income up to $15,000: no tax, Income from $15,000 to $30,000: 10% tax rate, Income from $30,000 up: 20% tax rate.

Draw your budget constraint with and without the income tax (hint: use our EITC example as a guide since subsidies are negative taxes)

You graduate from college and take a job at a consulting firm with a wage of $25/hour. Your job is extremely flexible: you can choose to work any number of hours from 0 to 2,000 per year. Suppose there is an income tax of the following form: Income up to $15,000: no tax, Income from $15,000 to $30,000: 10% tax rate, Income from $30,000 up: 20% tax rate.

Say that you choose to work 1,500 hours per year. What is your marginal tax rate? What is your average tax rate?Do these rates differ?Why or why not? (.5 point marginal rate, .5 point average, .5 point for if same, .5 point for why). Show your work for calculating the average tax rate to receive credit.