Question: True of false? Justify your answer rigorously. Consider a consumer with Cobb-Douglas preferences over consumption and leisure, and suppose the government imposes a proportional tax

True of false? Justify your answer rigorously. \"Consider a consumer with Cobb-Douglas preferences over consumption and leisure, and suppose the government imposes a proportional tax to labor income. In a static model where the consumer is pricetaker, does the tax policy distort its labor supply decision? Does this mean the proportional tam is distorting at all?\
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
