Consider a government which collects tax on wages received by workers to provide public goods. This tax creates a wedge/difference between the wages paid by the firms and wages received by the workers. The tax revenue is equal to the product of tax rate and quantity of workers hired. There is no corruption or political pressure on how much of the public good the government produces. a. Suppose the labour demand equation is given by w= 400-2L and the labour supply curve is fixed at 190 units. If the tax rate is $10 per unit, calcalate the tax revenue to be collected by the government. How many workers are hired before and after tax is imposed? Show your steps. b. Now suppose, with the same labour demand equation, the labour supply equation is w= 120+6L. If the tax rate is S10 per unit, calculate the tax revenue to be collected by the government. Calculate and compare the number of workers hired before and after tax is imposed. Show your steps. - Between a and b, in which scenario labour supply is relatively more elastic? Comparing the answers for part a and b, how is elasticity of supply of labour related to the tax revenue c. collection?

Consider a government which collects tax on wages received by workers to provide public goods. This tax creates a wedge/difference between the wages paid by the firms and wages received by the workers. The tax revenue is equal to the product of tax rate and quantity of workers hired. There is no corruption or political pressure on how much of the public good the government produces. a. Suppose the labour demand equation is given by w= 400-2L and the labour supply curve is fixed at 190 units. If the tax rate is $10 per unit, calcalate the tax revenue to be collected by the government. How many workers are hired before and after tax is imposed? Show your steps. b. Now suppose, with the same labour demand equation, the labour supply equation is w= 120+6L. If the tax rate is S10 per unit, calculate the tax revenue to be collected by the government. Calculate and compare the number of workers hired before and after tax is imposed. Show your steps. - Between a and b, in which scenario labour supply is relatively more elastic? Comparing the answers for part a and b, how is elasticity of supply of labour related to the tax revenue c. collection?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter10: Labor Markets And Income Distribution

Section: Chapter Questions

Problem 2SQP

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This question is based on Chapter 12 material.< Consider a government which collects tax on wages received by workers to provide public goods. This tax creates a wedge/difference between the wages paid by the firms and wages received by the workers. The tax revenue is equal to the product of tax rate and quantity of workers hired. There is no corruption or political pressure on how much of the public good the government produces. a. PRACTICE QUESTION C. Suppose the labour demand equation is given by w = 400-2L and the labour supply curve is fixed at 190 units. If the tax rate is $20 per unit, calculate the tax revenue to be collected by the government. How many workers are hired before and after tax is imposed? Show your steps. b. Now suppose, with the same labour demand equation, the labour supply equation is w- 120+6L. If the tax rate is $20 per unit, calculate the tax revenue to be collected by the government. Calculate and compare the number of workers hired before and after tax is…
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