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

#titleprivatization.., does privatization decentralise economic power? disc...

does privatization decentralise economic power? discuss

Uses of revised indicators of national wealth, Normal 0 false ...

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

What is the optimal tax rate, Jack and Jill live alone on  an island. Their...

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 i

Importance of valuation of environment, Normal 0 false false ...

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

Contingent valuation method, Contingent  Valuation Method Norma...

Contingent  Valuation Method Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Describe ex-ante heterogeneity, Q. Describe ex-ante heterogeneity? Firs...

Q. Describe ex-ante heterogeneity? First conflict reflects heterogeneity among agents due to different policy preferences. Individuals or agents are heterogeneous in a number o

Externality tax, Normal 0 false false false EN-IN X-N...

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

A model of fishery - bionomic model, Normal 0 false false f...

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