The equilibrium value of output.

Question

Suppose that the income tax in a certain nation is computed at a flat rate of 5%, but no tax is levied above $50,000 in taxable income, Taxable income, in turn, is calculated as the individual's income minus $10,000 (i.e., everyone gets a $10,000 deduction). For each of the following three individuals/workers, calculate their average tax rate and marginal tax rate. Make sure you write tax rates as percentages and where necessary, round to two decimal places. A) A part-time worker with an annual gross income of $9,000: average tax rate is marginal tax rate is B) A retail salesperson with annual income of $45,000: average tax rate is rate is %. tax rate is %. C) An advertising executive with annual income of $600,000: average tax rate is %. % and % and marginal tax % and marginal

Answer 1

Question

Chapter 15, Problem 5NP

a)

To determine

To find: The equilibrium value of output.

b)

To determine

To find: The equilibrium value of real wage, employment, N and output when 25% tax on wage is levied.

c)

To determine

To know: The equilibrium value of real wage, employment, N and output when 50% tax is levied on wages.

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