1. Let the (pre-tax) price level P equal 1. Let W denote the nominal wage rate and L denote the number of hours worked. Suppose the income tax rate is th (a) Suppose that L equals 100. Calculate after-tax income (after-income tax income). (b) Suppose the sales tax rate (the tax rate on consumption) is denoted to . Suppose that, with the pre-sales tax P equal to 1, the price of goods equals (1+ tc). Calculate after-tax real (labour) income (this after-tax variable depends on both tax rates). Explain, in words, what this after-tax real income variable measures.

1. Let the (pre-tax) price level P equal 1. Let W denote the nominal wage rate and L denote the number of hours worked. Suppose the income tax rate is th (a) Suppose that L equals 100. Calculate after-tax income (after-income tax income). (b) Suppose the sales tax rate (the tax rate on consumption) is denoted to . Suppose that, with the pre-sales tax P equal to 1, the price of goods equals (1+ tc). Calculate after-tax real (labour) income (this after-tax variable depends on both tax rates). Explain, in words, what this after-tax real income variable measures.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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first image is resource. questions starts in the second image (4. and 5.)
first image is a resource for the question in the second image. Thank you so much! :)
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