Steve, a resident of Econoland, currently works 20 hours a week and earns an annual Income of $50,000. The following table shows income tax rates in Econoland. Annual Income Tax Rate
Up to $50,000 10%
From $50,000 to $75,000 20%
Over S75,000 30%
This is an example of a income tax.
After paying income taxes. Steve receives per year.
If Steve works an additional 10 hours a week (30 hours a week total), his annual income will be $75.000. After paying income taxes, Steve will receive per year. In other words, by working an additional 10 hours per week, Steve will receive an additional .
If Steve works 10 more hours in a week (40 hours a week total), his annual Income will further Increase to $100,000. After paying income taxes, Steve will receive per year. In other words, by working 10 more hours per week, Steve will receive more than what he would receive if he works only 30 hours a week.
As Steve works more, the additional amount he receives from working 10 more hours , which means his cost of leisure .