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In: Economics

Suppose a consumer has 60 hours per week to allocate between work and play, and the...

Suppose a consumer has 60 hours per week to allocate between work and play, and the hourly wage rate is $30. She chooses to have 20 hours of leisure and 40 hours of working. The government imposes a $10 per hour income tax. With the tax, the consumer chooses to have 25 hours of leisure.

On a graph with “leisure hours per week” on the horizontal axis and “consumption in dollars” on the vertical to illustrate your weekly budget constraint, illustrate your weekly budget constraint. Label with numbers and indicate the endowment bundle, the optimal bundle before tax, the optimal bundle after tax and tax revenue collected by the government.

PLEASE INCLUDE THE GRAPH LIKE THE QUESTION ASKS

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Expert Solution

Rahul Sunny answered 8 months ago
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