How should the lump-sum income tax change to allow household

Reference no: EM133377123

Question: Households receive 40 from firms in gross income. They pay a lump-sum tax of 10 on it. Their marginal propensity to consume is 0.75 and the starvation-level consumption is 6. Find the households' savings.

How should the lump-sum income tax change to allow households to save 3?

show the graph of the consumption function and the breakeven condition for this problem. Point out the income and consumption values relevant for this problem

Reference no: EM133377123

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