Homework answers / question archive / Dr Johnson receives a lump sum payment of $150 per week

Dr Johnson receives a lump sum payment of $150 per week

Economics

Share With

Dr Johnson receives a lump sum payment of $150 per week. Suppose that the first $150 per week of labor income is untaxed but all labor income above $150 is taxed at a rate of 10%.

a .Dr. Johnson’s budget line has a kink in it at the point where he takes 60 units of leisure.

b.Dr. Johnson’s budget line has a kink where his income is $300 and his leisure is 50 units.

c.Dr. Johnson’s budget line has slope -4.50 everywhere.

d.Dr. Johnson’s budget line has no kinks in the part of it that corresponds to a positive labor supply.

e.Dr. Johnson’s budget line has a piece that is a horizontal straight line.

f.none of these choices are correct