ECON403, Public Economics

Assignment Help:
Jack and Jill live alone on an island. Their labour supply schedules are identical and given by L = (1 - t)w, where t is the income tax rate and w denotes the wage. Jill''s wage is 6 and Jack''s is 2. The tax paid by an individual is twL and each receives a transfer equal to half the total revenues. Jack and Jill have identical utility functions given by U =C - (1/2)L2
, where C denotes consumption (the individual''s income after tax and transfer). If the social welfare function is W = 3Ujack + UJill, what is the optimal tax rate?

[Hint: Write W as a function of the tax rate t.] Why is the optimal tax rate not 0? Why is
it not 1?

Related Discussions:- ECON403

Graphthe market for water park business, Graphthe market for water park bus...

Graphthe market for water park business, labeling the demand curve, the social-value curve, the market equilibrium level of output, and the efficient level of output. What is the p

Regulations and competition policy - privatization, One of these is deregul...

One of these is deregulator or privatization of public enterprises or utilities. Deregulation is a world wide phenomenon. But experience of power failure in California and Mumbai r

Privatisation and decentralisation, critically examine that privatization c...

critically examine that privatization can always decentralize economic power

Classification of externality, Normal 0 false false false ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Welfare and subsidies, Are there any current subsidy or welfare issues that...

Are there any current subsidy or welfare issues that are being discussed or addressed in parliament or municipalities?

How to prevent bulling, what could I write for pharigraph 2 on why a bully ...

what could I write for pharigraph 2 on why a bully bullies

Pareto Optimality, Consider an economy in which George and Harriet consume ...

Consider an economy in which George and Harriet consume only ale and bread

Economics, three basic economics difference between them and definations

three basic economics difference between them and definations

OPTIMAL COMMODITY, State ramsey rule of optimal commodity taxation and the ...

State ramsey rule of optimal commodity taxation and the intuition for it

Coase's bargaining solution, Normal 0 false false false ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Write Your Message!

Captcha
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