Leisure-income diagram consistent

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Suppose that the government proposes eliminating any tax on earnings from work which are less than $20,000 for Americans at least 62 years old. Seniors earning more than this threshold would still be subject to the normal income tax rates on higher earnings

a. Sketch a budget constraint in the leisure-income diagram consistent with this proposal.

b. If the proposal were adopted, what would happen to the labor supply for seniors? Explain.

Reference no: EM131742296

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