Suppose the annual welfare benefit formula is Benefit = $4,000 0.67(Wages > $2,000) Instructions: Round your responses to the nearest whole number. a. What is the marginal tax rate on (i) The first $2,000 of wages? 0.266 % (ii) Wages above $2,000? b. How large is the benefit if wages equal (1) SO? (ii) $3.000?

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Suppose the annual welfare benefit formula is
Benefit = $4,000 0.67(Wages > $2,000)
Instructions: Round your responses to the nearest whole number.
a. What is the marginal tax rate on
(i) The first $2,000 of wages?
0.266 %
(ii) Wages above $2,000?
b. How large is the benefit if wages equal
(1) SO?
(ii) $3.000?
Transcribed Image Text:Suppose the annual welfare benefit formula is Benefit = $4,000 0.67(Wages > $2,000) Instructions: Round your responses to the nearest whole number. a. What is the marginal tax rate on (i) The first $2,000 of wages? 0.266 % (ii) Wages above $2,000? b. How large is the benefit if wages equal (1) SO? (ii) $3.000?
0.266 %
(ii) Wages above $2,000?
%
b. How large is the benefit if wages equal
(0) $0?
$
(ii) $3,000?
(iii) $5,000?
c. What is the breakeven level of income in this case?
$
Transcribed Image Text:0.266 % (ii) Wages above $2,000? % b. How large is the benefit if wages equal (0) $0? $ (ii) $3,000? (iii) $5,000? c. What is the breakeven level of income in this case? $
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