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  3. 3. a. budget line: larry is paid $20 per hour. all

3. A. Budget line: Larry is paid $20 per hour. All income is tax free...

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Accounting

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3. A. Budget line: Larry is paid $20 per hour. All income is tax free labor Leisure Cobb Douglas. Larry chooses to work for 40 hours per week, in this case Draw the full labor leisure diagram with the budget line and tabel Larry's point of optimitation. How much money is he paid? B. Budget line 2. Draw a new budget line to the following specifications: Larry is paid $30 per hour. The first $300 earned is tax free. The second $300 earned pays a 20 percent tax. Any additional earnings (above $600 gross) pay 40 percent tax C. Is Larry better off on budget line or on budget line 2? Explain how you know. Aso use another Cobb-Douglas indifference curve to justify your answer 1

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