Please help me with first question only. I will appreciate. 3-6. Consider each of the following and explain why it is or is not a valid instrument forestimating the laboor supply elasticity and/or labor demand elasticity in the UnitedStates. (1) Variation in state income tax rates. (2) Variation in state corporate taxrates. (3) Changes in federal income tax rates over time.3-7. Suppose a firm purchases labor in a competitive labor market and sells its productin a competitive product market. The firm's elasticity of demand for labor is –0.4.Suppose the wage increases by 5 percent. What will happen to the amount of laborhired by the firm? What will happen to the marginal productivity of the last workerhired by the firm?

An instrument is valid to estimate the labor supply elasticity if it shifts labor demand but not…

Consider each of the following and explain why it is or is not a valid instrument for estimating the labor supply elasticity and/or labor demand elasticity in the United States. (1) Variation in state income tax rates. (2) Variation in state corporate tax rates. (3) Changes in federal income tax rates over time.