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cyanotter562Lv1
28 Sep 2019
Suppose that the government imposes a proportional tax on the representative consumer's wage income. That is, the consumer's wage income is w (1- t) (h - l) where t is the tax rate, and h is the working hours and l is the leisure hours. What effect does the income tax have on consumption and working hours? Explain your results in terms of the income and substitution effects.
Suppose that the government imposes a proportional tax on the representative consumer's wage income. That is, the consumer's wage income is w (1- t) (h - l) where t is the tax rate, and h is the working hours and l is the leisure hours. What effect does the income tax have on consumption and working hours? Explain your results in terms of the income and substitution effects.
Vaishali YadavLv10
28 Sep 2019
