Suppose that one could determine the amount of income that is pure economic rent.If a law were passed that taxed 50 percent of that rent, what would happen to the amount of work that people perform?
A)It would increase as people seek higher income.
B)It would be unchanged.
C)It would decrease as people suffer a loss of income.
D)It would increase for some and decrease for others.

Question

Quizplus · Accepted Answer

Economic rent refers to income earned from an inelastic supply of resources or talents. Taxing this rent does not affect the supply of work because it does not alter the marginal productivity or the decision-making process regarding labor supply.

Suppose That One Could Determine the Amount of Income That