Includes nonlabor income to portray

Reference no: EM13827464

Use a work-leisure diagram that includes nonlabor income to portray an individual who is maximizing utility by working, say, 8 hours per day. Now compare the labor supply effects of imposing (a) a lump-sum tax and (b) proportional tax of, say, 30 percent od earned income. Do hours of work rise or fall in each case ? Can you generalize these outcomes of all individuals in the economy? Explain.

Reference no: EM13827464

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