Question: Show that the consumer is better off with a lump sum
Show that the consumer is better off with a lump-sum tax rather than a proportional tax on wage income (as in question) given that either tax yields the same revenue for the government. You must use a diagram to show this.
Answer to relevant QuestionsRecall that leisure time in our model of the representative consumer is intended to capture any time spent not working in the market, including production at home such as yard work and caring for children. Suppose that the ...In the course of producing its output, a firm causes pollution. The government passes a law that requires the firm to stop polluting, and the firm discovers that it can prevent the pollution by hiring x workers for every ...Suppose that total factor productivity, z, affects the productivity of government production just as it affects private production. That is, suppose that when the government collects taxes, it acquires goods that are then ...What does the DMP model predict would be the effects of labor-saving devices in the home, for example dishwashers, washing machines, and vacuum cleaners? Use diagrams to show the effects on the unemployment rate, the vacancy ...Suppose that the economy is initially in a steady state and that some of the nation’s capital stock is destroyed because of a natural disaster or a war.(a) Determine the long-run effects of this on the quantity of capital ...
Post your question