1. Now imagine that the tax on fishing works in a different way: each player must pay a tax τ proportional to the fishing hours of the other player. So McKenna would pay an amount equal to τeN, and Natasha would pay τeM.
Evaluate the following statement and say whether it is true or false.
This modified tax would still be able to produce a Pareto-efficient outcome, if the value of τ is chosen appropriately.
2. Justify your answer to the previous question. If you want to include some formulas/calculation in the answer, you can make a photo and attach it here. If you prefer to just explain the reason in words, it is equally fine, as long as you explain the reason why the statement is true or false.
1) the statement is correct(true)
Proportional tax is an income tax system where the same percentage of tax is been levied of all the taxpayers regardless of their incomes
EXPLANATION TO THE STATEMENT
the tax is been collected at the same rate of percentage for all the three(McKenna, Ten, Natasha) proportional to the hours of work done by them.
FORMULA TO CALCULATE PROPORTIONAL TAX
Income* percentage of income paid In tax
2) No, the modified tax would still ale to produce since it is impossible to re allocate the resources to make any one individual preference criterion better off without making Individual preference worse off.
1. Now imagine that the tax on fishing works in a different way: each player must...