Suppose that one could determine the amount of income that is pure economic rent.If a law were passed which 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 is the income earned from a resource without any effort or cost. Taxing economic rent does not affect the incentive to work because it does not change the marginal benefit of working. Therefore, the amount of work performed would remain unchanged.

Suppose That One Could Determine the Amount of Income That