What increase in this mean rate of tax has the same effect

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Using the results of the previous exercise, find the mean labor-supply response to an increase in the 25 percent rate to 26 percent. Now consider a consumer of mean wage rate facing the mean tax rate found in part b above. What increase in this mean rate of tax has the same effect as the 1 percent increase in the 25 percent rate? Does the use of the mean marginal rate provide a good indication of the labor supply response?

Reference no: EM131209210

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