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- IF demand equation is Qdx-20+3M assume that the income of individuals are 30ORO. What will be the Qd a. 1500 b. 320 C. 1250 O d. 920The United States has established a progressive income tax system, where a worker’s tax rate onearnings increases as she earns more money. There are 168 hours in a given week. Assume thatfor the first 56 hours worked, the tax rate is t1, which means that the net real wage is w*(1-t1).After working the 56th hour, the worker jumps to a higher tax rate t2. After the 112th hourworked, the individual jumps to an even higher tax rate, t3.(a) During most election years, some politicians argue that a having a flat tax system isbetter. Assume that there is a proposal to institute a flat tax, where all workers pay a taxrate equal to t4, which is greater than t3. On the same set of axes, graph the budgetconstraints associated with the progressive tax system and the flat tax system. Make sureto label all of the slopes.(b) Would moving to this proposed flat tax system likely encourage more or fewer hoursworked for relatively high-wage workers? Make sure to explain your answer (a writtenexplanation…4. Suppose that the government imposes a pro- portional income tax on the representative con- sumer's wage income. That is, the consumer's wage income is w(1– t)(h– 1) where t is the tax rate. What effect does the income tax have on consumption and labor supply? Explain your results in terms of income and substitution effects.
- IF demand equation is Qdx=20+3M assume that the income of individuals are 30ORO. What will be the the relation between them O a. Positive, 920 O b. Negative ,1520 O c. Positive, 1520 O d. Negative, 920(c) Calculate the new Gini Coefficient for Algura when income changes as follows:Say you define your permanent income as the average income this and the past 4 years’ incomes and you always consume 4/5 of your permanent income. Your earnings record over these years has been: Yt = 40,000 Yt-1 = 38,000 Yt-2 = 34,000 Yt-3 = 32,000 Yt-4 = 31,000 If next year your income increases to Yt+1 = 46,000 by how much will your consumption change between year t and year t+1?
- 4. Verify that a homogenous function has IRS, CRS or DRS depending on whether the degree of the function satisfies y> 1, y = 1, or y< 1.1. Gorgeousleny with an income of P150 would like to buy two goods. Let us say juice and bread. Price of juice is P12 and price of bread is P6. If gorgeousleny will buy the ist 5 juices she is entitled to a 50% off. Draw the graph. After a week gorgeousleny went back to the store and will still buy her two favorite goods with the same income of P150 and price of bread and juice is constant. but this time the promo of 50% off is applied after the ist 5 juices. Draw the graph. . a. ) Measure the qty. of bread on the vertical axis and the qty. of juice on the horizontal axis. Label both graph with its corresponding points, pt. A for bread and point B for juice. the combination of bread and juice label it as point C. b.) For both graph, What is the slope from point C to point B?; What is the slope from from point A to point C?Suppose that a person has 2000 hours to allocate each year between leisure and work. a. Derive the equation of his budget constraint given an hourly wage of $(15)/hour. b) Graph his budget constraint line based on the equation you derived in part a. (Consumption (C) on the vertical axis and leisure (L) on the horizontal axis). Please make sure to include the value for the vertical and horizontal intercepts. c) Now suppose that the local government introduces an income guarantee program for single parents in which the income transfer is $10,000 per year if an individual does not work during that year (this dollar amount represents the benefit guarantee). If the individual decides to work, this transfer program imposes a 100% benefit reduction rate (e. g.. each additional hourly wage earned is reduced by 100%). Derive the new budget constraint equation that corresponds to this scenario. d) Draw the budget line that corresponds to the new scenario on a new graph. (Consumption (C) on the…
- Q-4 Suppose that Kaleed’s income 1800 RO. And he purchased 30 units of goods y that cost 30 RO per unit. Calculate how many units Kaleed can buy of product X when it costs 20 RO.. Among the adult population of a certain town 50% are male. 60% are wage-earner and 50% are 45 years age or over, 10% ofmales are not wage earmers and 40% of males are under 45. Make the best possible inference about the limits within which the percentage of persons (male or female) of 45 years or over are wage earner.s3rian earns income equal to $82,000 in the first period, but his income will drop to $19,170 in the second period. a Sketch his intertemporal budget constraint, ansuming a 6.5% interest rate. Add an indifference curve that assumes he optimally chooses to save $40,000 in the first period. Be sure to CLEARLY graph your answer, with labeln on the axes and any other important points. Also show work for any calculations done. b. Show the offect of a 50% tax on interest income, assuming the substitution and income effects cancel each other out. Again, be sure to clearly graph your answer and show work for any calculations done.