Suppose the welfare benefit formula is
Benefit = $4,800 – 0.67 (Wages > $6,000)
Instructions: Enter your responses as a percent to the nearest whole number.
(a) What is the marginal tax rate on
(i) The first $6,000 of wages?
%
(ii) Wages above $6,000?
%
(b) How large is the benefit if wages equal
Instructions: Enter your responses rounded to the nearest whole number.
(i) $0?
$
(ii) $5,800?
$
(iii) $7,500?
$
(c) What is the breakeven level of income in this case?
Instructions: Enter your response rounded to two decimal places.
$
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