If the labour market is perfectly competitive, labour demand function is given by ND = a + bW and labour supply function is given by NS = c + dWw; W is the wage rate. After imposing a payroll tax T, market equilibrium wage rate will be: lower than before the tax, and workers pay b/(b - d) share of the tax. higher than before the tax, and workers pay b/(b - d) share of the tax. higher than before the tax, and the firm pays b/(b - d) share of the tax. equal to what it was before the tax.

If the labour market is perfectly competitive, labour demand function is given by ND = a + bW and labour supply function is given by NS = c + dWw; W is the wage rate. After imposing a payroll tax T, market equilibrium wage rate will be: lower than before the tax, and workers pay b/(b - d) share of the tax. higher than before the tax, and workers pay b/(b - d) share of the tax. higher than before the tax, and the firm pays b/(b - d) share of the tax. equal to what it was before the tax.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5
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（D）Detailed calculation steps