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 Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter4: Labor And Financial Markets

Section: Chapter Questions

Problem 26CTQ: Why are the factors that shift the demand for a product different from the factors that shift the...

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