Short Answer
Suppose that all workers place a value on their leisure of 75 goods per day.The production function relating output per day Y to the number of people working per day N is Y = 500N - 0.4N²,and the marginal product of labour is MPN = 500 - 0.8N.A 25% tax is levied on wages.
a.How much is output per day?
b.In terms of lost output,what is the cost of the distortion introduced by this tax?
Correct Answer:
Verified
Correct Answer:
Verified
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