Graph Input Tool (2) Market for Research Assistants 20 IWage (Dollars per hour) 18 Supply 16 Labor Demanded (Nurmber of workers) Labor Supplied (Number of workers) 310 190 14 12 Demand Shifter Supply Shifter 10 Tax Levied on Еmplo yers (Dollars per hour) Таx Levied on Workers (Dollars per hour) Dem and 4 50 100 100 200 250 300 350 400 450 S00 LABOR (Number of workers) For each of the proposals, use the previous graph to determine the new number of research assistants hired. Then compute the after-tax amount paid by employers (that is, the wage paid to workers plus any taxes collected from the employers) and the after-tax amount earned by research 25sistants (that is, the wage received by workers minus any taxes collected from the workers). After-Tax Wage Paid by Employers (Dollars per hour) After-Tax Wage Received by Workers Таx Proposal Quantity Hired (Number of workers) Levied on Levied on (Dollars per hour) Employers (Dollars per hour) Workers (Dollars per hour) 4 2 2 Suppose the government is concermed that research assistants already make too little money and, therefore, wants to minimize the share of the taxc paid by employees. Of the three tax proposals, which is best for accomplishing this goal? O The proposal in which the entire tax is collected from workers O The proposal in which the tax is collected from each side evenly O The proposal in which the tax is collected from employers O Nome of the proposals is better than the others unoujad suejjon)anw

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The following graph shows the labor market for research assistants in the fictional country of Academia. The equilibrium wage is $10 per hour, and the equilibrium number of research assistants is 250.

Suppose the government has decided to institute a $4-per-hour payroll tax on research assistants and is trying to determine whether the tax should be levied on the employer, the workers, or both (such that half the tax is collected from each side).

Use the graph input tool to evaluate these three proposals. Entering a number into the Tax Levied on Employers field (initially set at zero dollars per hour) shifts the demand curve down by the amount you enter, and entering a number into the Tax Levied on Workers field (initially set at zero dollars per hour) shifts the supply curve up by the amount you enter. To determine the before-tax wage for each tax proposal, adjust the amount in the Wage field until the quantity of labor supplied equals the quantity of labor demanded. You will not be graded on any changes you make to this graph.

Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.

Graph Input Tool
(2)
Market for Research Assistants
20
IWage
(Dollars per hour)
18
Supply
16
Labor Demanded
(Nurmber of workers)
Labor Supplied
(Number of workers)
310
190
14
12
Demand Shifter
Supply Shifter
10
Tax Levied on
Еmplo yers
(Dollars per hour)
Таx Levied on
Workers
(Dollars per hour)
Dem and
4
50 100 100 200 250 300 350 400 450 S00
LABOR (Number of workers)
For each of the proposals, use the previous graph to determine the new number of research assistants hired. Then compute the after-tax amount
paid by employers (that is, the wage paid to workers plus any taxes collected from the employers) and the after-tax amount earned by research
25sistants (that is, the wage received by workers minus any taxes collected from the workers).
After-Tax Wage Paid by
Employers
(Dollars per hour)
After-Tax Wage Received by
Workers
Таx Proposal
Quantity Hired
(Number of
workers)
Levied on
Levied on
(Dollars per hour)
Employers
(Dollars per hour)
Workers
(Dollars per
hour)
4
2
2
Suppose the government is concermed that research assistants already make too little money and, therefore, wants to minimize the share of the taxc
paid by employees. Of the three tax proposals, which is best for accomplishing this goal?
O The proposal in which the entire tax is collected from workers
O The proposal in which the tax is collected from each side evenly
O The proposal in which the tax is collected from employers
O Nome of the proposals is better than the others
unoujad suejjon)anw

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