Foundations of Economics (8th Edition)
Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 19, Problem 10SPPA
To determine

Difference in wage rate and quantity employed.

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6. Who should pay the tax? The following graph gives the labor market for laboratory aides in the imaginary country of Sophos. The equilibrium hourly wage is $10, and the equilibrium number of laboratory aides is 250. Suppose the federal government of Sophos has decided to institute an hourly payroll tax of $4 on laboratory aides and wants to determine whether the tax should be levied on the workers, the employers, or both (in such a way that half the tax is collected from each party). 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…
Write down the factors affecting supply. Which of the following factors will cause the following products to increase or decrease? Crude oil Beef Hotel rooms Fast food outlets Credit cards issued by financial institutions Laptop computers
Using a diagram explain what happens to the long-run demand curve for labor if the price of labour increases? Decompose the changes into scale and substitution effects.
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