? Show transcribed image text 3. In an economy, the labour supply curve is S = 5Wa, where wa is the


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? Show transcribed image text 3. In an economy, the labour supply curve is S = 5Wa, where wa is the 2 answers below » ? Show transcribed image text 3. In an economy, the labour supply curve is S = 5Wa, where wa is the after-tax wage rate. Assume that the before-tax wage rate is fixed at lo. a. Derive an expression for tax revenues as a function of the tax rate. b. If the current tax rate is 70%, is the government on the good side of the Laffer curve? (Use a graph in your answer, and explain what it means to be on the good side of the Laffer curve) c. What is the elasticity of labour supply at the current tax rate? d. What advice would you give the government if it is looking at possible tax re forms? View complete question » ? Show transcribed image text 3. In an economy, the labour supply curve is S = 5Wa, where wa is the after-tax wage rate. Assume that the before-tax wage rate is fixed at lo. a. Derive an expression for tax revenues as a function of the tax rate. b. If the current tax rate is 70%, is the government on the good side of the Laffer curve? (Use a graph in your answer, and explain what it means to be on the good side of the Laffer curve) c. What is the elasticity of labour supply at the current tax rate? d. What advice would you give the government if it is looking at possible tax re forms? Bonus: What is the revenue maximizing tax rate? View less » Jul 03 2015 01:40 PM

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