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

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

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

Summary of valuation of environment, Normal 0 false false f...

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

Possibility of foreign aid in exchange, This question considers the possibi...

This question considers the possibility of foreign aid in exchange for favors. Suppose nation A has RA resources in its treasury and nation B has RB resources. The winning coalitio

Model of industry protection of grossman and helpman, Consider the model of...

Consider the model of industry protection of Grossman and Helpman. There are two industries A and B, each producing good X and Y respectively. All other things being equal, the dem

Health economics, why is it important to consider the complex nature of hea...

why is it important to consider the complex nature of health and health care when examining economic principles related to health care delivery?

Information as intervention and political process, Rules concerning disclos...

Rules concerning disclosure of information and accounting change behaviour but only be drawing attention to certain facts. In the area of environment, Health, epidemics, and other

Importance of elasticities of demand and supply, QUESTION 1: Assuming t...

QUESTION 1: Assuming that you are a consultant on the ‘Light Rail' project and you are asked to forecast demand for this mode of transport. What are the forecasting techniq

Comment on each of the following statements, Unions tie the hands of manage...

Unions tie the hands of management and inhibit efficient decision making

Explain how the mobile industry is enabling economic growth, Question: ...

Question: (a) Jeffrey Sachs, Columbia University's Earth Institute Development Guru, opines that the humble mobile phone is "the single most transformative tool for developmen

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