Consider an economy in which individuals choose between work time and leisure time. They spend all of their wages from work hours on consumption goods. Suppose that the government introduces an ad valorem tax of 45 percent imposed on all consumption goods and on leisure time. In the case of consumption, the tax applies to the expenditure amount. In the case of leisure time, the tax applies to the value of leisure time assessed at the individual's hourly wage from labour. What income tax rate is equivalent to this tax on consumption and leisure? [NOTE: If necessary, please round your answer to the nearest percent. Enter the whole number corresponding to the percentage rate. Do not enter the percent sign. For example, if your answer is 12 percent, you should enter 12 in the answer space, not 0.12.]

Consider an economy in which individuals choose between work time and leisure time. They spend all of their wages from work hours on consumption goods. Suppose that the government introduces an ad valorem tax of 45 percent imposed on all consumption goods and on leisure time. In the case of consumption, the tax applies to the expenditure amount. In the case of leisure time, the tax applies to the value of leisure time assessed at the individual's hourly wage from labour. What income tax rate is equivalent to this tax on consumption and leisure? [NOTE: If necessary, please round your answer to the nearest percent. Enter the whole number corresponding to the percentage rate. Do not enter the percent sign. For example, if your answer is 12 percent, you should enter 12 in the answer space, not 0.12.]

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter4: Labor And Financial Markets

Section: Chapter Questions

Problem 31P: Table 4.6 shows the amount of savings and barrowing in a market for loans lo purchase homes,...

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