3. The government is considering raising the tax rate on labor income. Explain the supply-side effects of such an action and use appropriate graphs to show the directions of change, not exact magnitudes. What will happen to a. The supply of labor and why? b. The demand for labor and why? c. Equilibrium employment and why?

3. The government is considering raising the tax rate on labor income. Explain the supply-side effects of such an action and use appropriate graphs to show the directions of change, not exact magnitudes. What will happen to a. The supply of labor and why? b. The demand for labor and why? c. Equilibrium employment and why?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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29. Predict how each of the following events will raise or lower the equilibrium wage and quantity of oil workers in Texas. In each case, sketch a demand and supply diagram to illustrate your answer. a. The price of oil rises. b. New oil-drilling equipment is invented that is cheap and requires few workers to run. c. Several major companies that do not drill oil open factories in Texas, offering many well-paid jobs outside the oil industry. d. Government imposes costly new regulations to make oil-drilling a safer job.
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68. Supply-side economic studies indicate that a. Marginal income tax rates of about 20% start to reduce incentive to work. b. Marginal income tax rates of about 30% start to reduce incentive to work. c. Marginal income tax rates of about 40% start to reduce incentive to work. d. Marginal income tax rates of about 50% start to reduce incentive to work. e. Marginal income tax rates of about 60% start to reduce incentive to work.
How does the amount of employment created by an increase in the minimum wage depend on the elasticity of labor demand? Group of answer choices: a. When the minimum wage increases, employment will fall by a greater amount when the demand for labor is more elastic. b. When the demand for labor is more elastic, raising the minimum wage has no impact on employment. c. When the demand for labor is more inelastic, raising the minimum wage has no impact on employment. d. When the minimum wage increases, employment will fall by a greater amount when the demand for labor is more inelastic.
Which of the following statements is true? A. A price ceiling set below the equilibrium price in a particular market will cause a shortage. B. A price floor set above the equilibrium price, in a particular market, will have no effect on that market. C. A price floor set below the equilibrium price in a particular market will cause a shortage. D. A price ceiling set above the equilibrium price, in a particular market, will cause a surplus. QUESTION 6 Economic growth refers to: A. a long term increase in potential real GDP. B. an increase in nominal GDP. C. an increase in the price level. D. an economic expansion.
68. Supply-side economic studies indicate that a. Marginal income tax rates of about 20% start to reduce incentive to work. b. Marginal income tax rates of about 30% start to reduce incentive to work. c. Marginal income tax rates of about 40% start to reduce incentive to work. d. Marginal income tax rates of about 50% start to reduce incentive to work. e. Marginal income tax rates of about 60% start to reduce incentive to work. 69. Suppose that households supply 500 billion hours of labor per year and have a tax elasticity of supply of 0.16. If the tax rate is increased by 19.6% from 20% to 39.6%, use the formula to calculate by how many hours the labor supply will decline. a. The number of labor hours supplied will decline by 28.67 billion. b. The number of labor hours supplied will decline by 1.568 trillion. The number of labor hours supplied will decline by 2.465 trillion. d. The number of labor hours supplied will decline by 3.422 trillion. e. The number of labor hours supplied…
Only questions D & E
4:12 PM Tue Apr 27 * 37% ( Notes A few years ago the house of representatives passed a bill to change the payroll tax paid by workers(The tax that fun Social Security let's analyze how this tax affects workers, firms, and the government. A. Draw a graph for the labor market in the United States. Assume the market is perfectly competitive. So the affects of a payroll tax on workers (To make things easy, assume the tax is a fixed amount, say $1000). Label the wage paid by firms before the tax F1, the wage paid with the tax F2, The wage received by workers before the tax W1, and the wage received with the tax W2. Label the number of jobs before the tax Q1 and the number of jobs with the tax Q2 the deadweight loss B. The bill pass by the house lowers the tax paid by workers to $500. Show the effects of the change on your graph above. Label the new wage paid by firms F3 and the new wage received by workers W3. Is there any change in the deadweight loss C. How does the tax cut affect workers…
2. The theory of efficiency wages explains why: A. setting wages at the equilibrium level may increase unemployment. B. the most efficient way to pay workers is to pay them according to their skills. C. if worker productivity is tied to their wage rate, then it is in the best interest of firms to offer wages that are above the equilibrium wage rate. D. it is efficient for firms to set wages at the equilibrium wage rate. 5. The labor demand curve is because as the real wage rate increases A. downward-sloping; profit maximizing firms will want to employ more labor B. upward-sloping; profit maximizing firms will want to employ more labor C. upward-sloping; profit maximizing firms will want to employ less labor D. downward-sloping; profit maximizing firms will want to employ less labor 7. When large numbers of unemployed workers leave the labor force, the labor force will decline at a unemployment, causing the unemployment rate to rate than total A. faster; rise B. slower; fall C. slower;…