Suppose last year Moe faced a 25% marginal tax rate.This year tax rates have increased and now Moe faces a 30% marginal tax rate.Moe may choose to work more hours this year because:
A)working hours tend to increase over a worker's life in the United States.
B)the opportunity cost of leisure has increased.
C)the opportunity cost of leisure has fallen.
D)he must work more hours to have the same after-tax income this year.

Question

Quizplus · Accepted Answer

The opportunity cost of leisure has increased because Moe must now work more hours to earn the same after-tax income.

Suppose Last Year Moe Faced a 25% Marginal Tax Rate