Katie carns $12/hour before taxes. Income taxes are proportional to gross income, and the tax rate...

 

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Katie carns $12/hour before taxes. Income taxes are proportional to gross income, and the tax rate is 25%, so take-home pay is $9 per hour. Suppose that in this situation Katie chooses a 40-hour workweek. (Note: there are 168 hours in a week). (a) Draw Katie's weekly budget constraint and sketch the indifference curve she is currently reaching. (b) The government offers to abolish the income tax if workers, in return, work their first 10 hours a week for the government, without pay. Draw Katie's new budget line. Will Katie accept this offer? If she accepted or was forced to accept the offer, what affect would it have on her hours of work? Katie carns $12/hour before taxes. Income taxes are proportional to gross income, and the tax rate is 25%, so take-home pay is $9 per hour. Suppose that in this situation Katie chooses a 40-hour workweek. (Note: there are 168 hours in a week). (a) Draw Katie's weekly budget constraint and sketch the indifference curve she is currently reaching. (b) The government offers to abolish the income tax if workers, in return, work their first 10 hours a week for the government, without pay. Draw Katie's new budget line. Will Katie accept this offer? If she accepted or was forced to accept the offer, what affect would it have on her hours of work?

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Kindly find answer to Question i Answer to Question ii The concept of Relative range is cost need to ... View the full answer