Shari can work up to 80 hours each week at a pre-tax wage of $20 per hour but faces a10% payroll tax. Under these conditions, she maximizes her utility by choosing to work35 hours each week. The government proposes a negative income tax wherebyeveryone is given $105 each week, and anyone can supplement their income byworking. To pay for the negative income tax, the payroll tax rate will be increased to25%.a. On a single graph, draw Shari's original budget line and her budget line under thenegative income tax.b. Show that Shari will choose to work fewer hours if the negative income tax isadopted.c. Will Shari's utility be greater under the negative income tax?

In the above questions, it is given that : Shari can work up to 80 hours per week Pre-tax wage =…

Answered: Shari can work up to 80 hours each week…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a person who can work up to 80 hours each week at a pretax wage of $20 per hour but faces a constant 20 percent payroll tax. Under these conditions, the worker maximizes her utility by choosing to work 50 hours each week. The government proposes a negative income tax whereby everyone is given $300 each week and anyone can supplement her income further by working. To pay for the negative income tax, the payroll tax rate will be increased to 50 percent.a. On a single graph, draw the worker’s original budget line and her budget line under the negative income tax.b. Show that the worker will choose to work fewer hours if the negative income tax is a dopted.c. Will the worker’s utility be greater under the negative income tax?
22. Taro's utility function is U(C, R) = 32√√R+C, where R is the amount of leisure. He has 16 hours a day to divide between work and leisure. He gets $10 an hour no matter how many hours he works, but must pay a 20% tax on his labor income. He has also an income of $40 from non-labor income source. How many hours will he choose to work? A) 4 B) 8 C) 10 D) 12 E) 16
Mark can work up to 80 hours each week at a pre-tax hourly wage of $20 but faces a constant 20 percent tax on his earnings. Thus, Mark maximizes his utility by choosing to work 50 hours per week. The government proposes a negative income tax whereby everyone is given $300 per week and anyone can supplement their income further by working. To pay for the negative income tax, tax on earnings will be increased to 50 percent. On a single graph, draw Mark's original budget line and his budget line under the negative income tax. Show that Mark will work fewer hours if the negative income tax is implemented Will Mark's utility be greater under the negative income tax? Discuss your answer.
Suppose Marcus eats nothing but burritos for dinner. He buys 30 burritos each month. During the last couple of weeks, Marcus noticed a decrease in the price of burritos. The price of burritos fell from $6.00 per burrito last month to $5.75 per burrito this month. Assume that Marcus has a fixed income of $180 that he can spend on burritos. How many burritos can Marcus afford to buy at the new price of $5.75?
Anne has a job that requires her to travel three out of every four weeks. She has an annual travel budget and can travel either by train or by plane. The airline on which she typically flies das a frequent-travel program that reduces the cose of her tickets according to the number of miles she has flown in a given year. When she reaches 25,000 miles, the airline will reduce the price of her tickects by 25 percent for the remainder of the year. when she reaches 50,000 miles, the airline will reduce the price by 50 percent for the remainder of ther year. Graph Anne's budget line with train miles on the vertical axis and plan miles on the horizontal axis Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
One proposal for reforming the welfare system is to create a negative income tax. Under the negative income tax, each person is entitled to a grant of G dollars permonth. For every dollar the person earns, the grant is reduced by t dollars. a. Suppose G = 200 and t = 0.40. Consider an individual whose hourly wage = $10. There are 30 days in a month, so the total allotment of T = 720. Sketch the budgetconstraint before and after the introduction of the negative income tax. b. Would people work more or less with the implementation of this system? c. What if t = 100%? Explain!
cook -int ences a) Chika has calculated the marginal utility that she derives from her paid employment and from leisure. This is presented in table below. In her ideal world, where she could work as few or as many hours as she wished, how would she allocate her sixteen waking hours? (She does need to sleep.) Hours 1 2 3 4 5 6 7 8 9 10 MU Paid Employment 80 75 70 65 60 55 50 45 40 35 MU Leisure 120 110 100 90 80 70 60 50 40 30 9 hours working and 40 hours leisure. b) Unfortunately, Chika begins to realize that unless she gets an education she will not enjoy a high salary and therefore, will not be able to afford more leisure time. She therefore decides to spend six hours each day studying (in addition to her eight hours of sleep). How will she now divide the remaining hours between work and leisure?! hours working and hours leisure. Help Save C
Income $240 $192 0 15 16 17 a) Using the above diagram, decompose the effect of a wage decrease for this individual into Income Effect (IE) and Substitution Effect (SE). Leisure 24 b) How many hours of work is effected because of the IE? c) How many hours of work is effected because of the SE? d) What is the net effect of this wage decrease on hours of work for this individual?
What is full price vs full income in household economics?
A family with a monthly income of $2200 spends $850 for rent $225 for utilities and $325 for food. What percent of the family income is spent for cach?
Graphically illustrate the TANF example with a 2,000-hour constraint between work and leisure and a $10 per hour wage rate. Illustrate two cases in the same graph, a guaranteed benefit of $5,000 and $3,000 with a benefit reduction rate of 50% in both cases. Identify the case of Sarah who reduces leisure when the guaranteed benefit is reduced from $5,000 to $3,000.
Terry decides to increase her work hours from 20 to 25 hour per week. 1. What would be her marginal utility loss from having less leisure time? 2. What would be her marginal utility gain from having additional income?

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