Would it be possible to contact you with a specific question regarding leisure constraint? I’ve been given an inequality but can’t seem to evaluate the variables and plot the constraint :/ it regards a progressive tax and how different tax brackets affect the budget line. I can’t link the image of the inequality here sadly
With a tax, which flattens the budget line, you should muliple the wage by (1 - tax). Assume 24 hours in day, nonlabor income is zero, wage is $10, and tax rate is 20%. C = (1 - 0.2)wage(24 - L) = 8(24 - L). Overtime pay will create a kink in the budget line, steepening it. Suppose overtime pay (time and half) kicks in after 8 hours of work. With my last example (but let's ignore taxes), the slope of the budget line will equal from -10 (or -wage) at 0 to 8 hours of work and equal -15 (-wage x 1.5) at 8 to 24 hours of work. There is a kink in the budget line at 8 hours of work or 16 hours of leisure.
Would it be possible to contact you with a specific question regarding leisure constraint? I’ve been given an inequality but can’t seem to evaluate the variables and plot the constraint :/ it regards a progressive tax and how different tax brackets affect the budget line. I can’t link the image of the inequality here sadly
at 6:31 equation should be c=320-20L
muy buena explicaciones, felicitaciones.
at 5:13 shouldnt the budget constraint equation be: C= 240 -10L
Yes. Thank you!
How would overtime and taxes be built into this? Thanks!
With a tax, which flattens the budget line, you should muliple the wage by (1 - tax). Assume 24 hours in day, nonlabor income is zero, wage is $10, and tax rate is 20%.
C = (1 - 0.2)wage(24 - L) = 8(24 - L).
Overtime pay will create a kink in the budget line, steepening it. Suppose overtime pay (time and half) kicks in after 8 hours of work. With my last example (but let's ignore taxes), the slope of the budget line will equal from -10 (or -wage) at 0 to 8 hours of work and equal -15 (-wage x 1.5) at 8 to 24 hours of work. There is a kink in the budget line at 8 hours of work or 16 hours of leisure.
@@EconomicsinManyLessons you’re a hero! Thank you 🙏🏼
@@EconomicsinManyLessons what will happen in the case of progressive taxation?
Hi