Question: A taxpayer faces the following MTRs for labor income The taxpayer

A taxpayer faces the following MTRs for labor income:
The taxpayer can earn $10 per hour. In the absence of any taxes, he would work an average of eight hours a day. Show how the tax affects his income leisure budget line and analyze the possible effects on his equilibrium allocation of time to work and leisure, assuming that leisure is a normal good.

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  • CreatedAugust 22, 2015
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