Will taxes on labor income reduce or increase labor supply

Assignment Help Microeconomics
Reference no: EM13699545

James is a 35-year-old economic consultant who eagerly anticipates the day he will retire from his job and move to a lovely, but expensive, vacation spot, complete with beachfront property and a yacht. James gets income from labor income and investment income (any money he saves can be invested), but income tax rates apply both to labor income and investment income.


Will taxes on labor income reduce or increase labor supply? Will taxes on labor income reduce or increase saving? And what about taxes on investment income – will these reduce or increase labor supply, and reduce or increase saving? Which of the two types of tax – a tax on labor income, or a tax on investment income – is likely to create more deadweight loss than the other?

Reference no: EM13699545

Previous Q& A

  Her minimum monthly payments are loan considerations

Mary's credit card situation is out of control because she cannot afford to make her monthly payments. She has three credit cards with the following 1 loan balances and APRs: Card 1, $4,500, 19%; Card 2, $5,700, 23%; and Card 3, $3,200, 15%. Interest..

  Determine the current amount of money

Determine the current amount of money that must be invested at 12% nominal interest, compounded monthly, to provide an annuity of $12000 per year for 4 years, starting 11 years from now. The interest rate remains constant over this entire period of t..

  Equation for total accounting cost and total economic profit

Three students consider the option of forming a lawn care and landscaping business during their summer vacation. They estimate the following costs: Insurance $2,600; Equipment Rental Fees $1,000; Fuel and Supplies $4 per lawn serviced and Miscellaneo..

  Percentage of companys capital structure consists of debt

Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 11%, and its common stock currently pays a $3.00 dividend per share (D0 = $3.00). The stock's price is currently $33.25, its dividend is expected ..

  Revenue function and cost function

A business owner used a revenue function and a cost function to analyze his monthly sales. One month he found that with a sales volume of 600 items he had revenues of $10,200. Another month he had total costs of $4,700 on a sales volume of 400 items...

  What is the pre-tax annual rate of return on this bond

You buy a bond for $1118 that pays $20 interest every 6 months. It will reach maturity in 9 years at which time it will return its face value of $1000 plus the final $20 interest payment. What is the pre-tax annual rate of return on this bond? Estima..

  Analyze the work-incentive effects of mitterands programs

When the late Francois Mitter and was the president of France, he instituted a number of programs designed to appeal to his “blue-collar” constituency. He raised the income tax rate applicable to the rich and expanded the free, government-provided so..

  Compute a weighted 3-month moving average forecast

Compute a weighted 3-month moving average forecast for months 4 through 9. Assign weights of 0.55, 0.33, and 0.12 to the months in sequence, starting with the most recent month.

  Determine the elasticity of industrys labor demand curve

What factors determine the elasticity of industry’s labor demand curve? Based on these factors, discuss labor demand for factory line workers versus labor demand for nurses, which one would be more elastic?

  Economies of scale and diseconomies of scale

Economies of scale and diseconomies of scale, what do these terms mean, when do they occur and how do they differ? Can you provide an example of economies and scale and dis-economies of scale.


Write a Review


Similar Q& A

  How information systems are changing several aspects

Explain how data systems are changing several aspects of the accounting profession. Include a description of a variety of new technologies and their effects on accounting processes.

  Do the field with both oil and gas have greater difficulties

Some fields have large enough quantities of both oil and natural gas that coordination must be achieved for the production of both, rather than oil a in our examples. Will fields with both oil and gas have greater difficulties in unitization.

  What are the advantages and disadvantages of management

If you hold shares in a corporation and management decides to plow back the company's earnings some year instead of paying dividends, what are the advantages and disadvantages to you

  Characteristics of monopolistic competition-oligopoly

Describe the major characteristics of monopolistic competition and oligopoly.

  Optimal level of consumption or consumer demand

The company selling the good x starts an advertisement campagin that has the following effect on the consumer he makes decisions as if maximizing a decision utility function.

  Political implications and influences

Provide alternative perspectives from experts on technology

  Compute consumer and producer surplus

Consider a perfectly competitive market with (inverse) demand of P = 90 - 3Q and supply of P = 10 + Q. Decide the equilibrium price and quantity. Compute consumer and producer surplus. What is the marginal cost, MC? What is the average cost, AC?

  Total liabilities and total assets motivates

The relationship between total liabilities and total assets motivates which of the following ratios? Which of the following financial statements would answer the question, “What did the company decide to use its profit for?” Your housing expense rati..

  Economists occasionally speak of helicopter money

Economists occasionally speak of “helicopter money” as a short-hand approach to explaining increases in the money supply. Suppose the Governor of the Fed flies over the country in a helicopter dropping 10,000,000 in newly printed $100 bills (a total ..

  Shifts in demand curve

What are some of the ways these curves shift and what is the corresponding change to the point of equilibrium?

  What will happen to the level of short term interest rates

If banks desire to increase their lending, but the Federal Reserve is not adding reserves to the banking system, what will happen to the level of short term interest rates? Explain your answer carefully.

  Consumer-driven health plans as patient write the

1. consumer-driven health plans as a patient write your recommendations to accept or decline at least three types of

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd