3. The demand curve for gardeners is Gd = 20 – W, where, G = the number of gardeners, and W= the hourly wage. The supply curve is Gs = 4W. a) Graph the demand and supply curves. What is the equilibrium wage and equilibrium number of gardeners hired? b) Suppose the town government imposes a $2 per hour tax on all gardeners. What is the effect on the equilibrium wage and the equilibrium number of gardeners hired? Graph the impact of this tax on the market c) How much is the tax burden on gardeners? d) How much is the tax burden on consumers? e) How much does the government receive as tax revenue? f) Calculate the elasticity of employment in Gd and Gs at the equilibrium wage calculated in (a). Do they have the same elasticity values for every point across the curve? Explain.
3. The demand curve for gardeners is Gd = 20 – W, where, G = the number of gardeners, and W= the hourly wage. The supply curve is Gs = 4W. a) Graph the demand and supply curves. What is the equilibrium wage and equilibrium number of gardeners hired? b) Suppose the town government imposes a $2 per hour tax on all gardeners. What is the effect on the equilibrium wage and the equilibrium number of gardeners hired? Graph the impact of this tax on the market c) How much is the tax burden on gardeners? d) How much is the tax burden on consumers? e) How much does the government receive as tax revenue? f) Calculate the elasticity of employment in Gd and Gs at the equilibrium wage calculated in (a). Do they have the same elasticity values for every point across the curve? Explain.
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: The Markets For The Factor Of Production
Section: Chapter Questions
Problem 1PA
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