Question

Keep the Highest: 7/8 Attempts: 75 4. Income taxes Aa Aa Jeff, a resident of Econoland, currently works 20 hours a week and earns an annual income of $80,000. The following table shows income tax rates in Econoland Annual Income Tax Rate 10% Up to $80,000 From $80,000 to $120,000 20% 30% Over $120,000 This is an example of a income tax After paying income taxes, Jeff receives per year If Jeff works an additional 10 hours a week (30 hours a week total), his annual income will be $120,000. After paying income taxes, Jeff will receive per year. In other words, by working an additional 10 hours per week, Jeff will receive an additional If Jeff works 10 more hours in a week (40 hours a week total), his annual income will further increase to $160,000 After paying income taxes, Jeff will receive per year. In other words, by working 10 more hours per week, Jeff will receive more than what he will receive if he works only 30 hours a week As Jeff works more, the additional amount he receives from working 10 more hours which means his cost of leisure

Answer 1

This is an example of progressive tax rate

After paying tax, Jeff receives 72000 per year

additional 10 hours will make Jeff earn=120000

After tax, Jeff receives an income of 104000

Thus additional 10hours will receive 32000 more than he will receive if he works for 20hours

after 40 hours, net income received=132000 per year

Jeff receives 28000 more than he will receive if he works only 30 hours

amount receives from working additional 10 hours decreases which means opportunity cost of leisure decreases