Suppose in market for truck drivers, the labour demand curve is W = 10 – 2L and labour supply curve is W = 2 + 2L. Suppose government requires employers pay $10 per driver that it will use to finance certain government programs for truck drivers. a. What is the effect of this policy on the market for truck drivers? b. How is the incidence of this tax distributed between employers and employees? Will this distribution change if the tax fell to $5? Explain. c. What is the net gain or net loss to the society from a $10 tax? Will this net gain or net loss change if the subsidy per worker fell to $5? Explain.

Suppose in market for truck drivers, the labour demand curve is W = 10 – 2L and labour supply curve is W = 2 + 2L. Suppose government requires employers pay $10 per driver that it will use to finance certain government programs for truck drivers. a. What is the effect of this policy on the market for truck drivers? b. How is the incidence of this tax distributed between employers and employees? Will this distribution change if the tax fell to $5? Explain. c. What is the net gain or net loss to the society from a $10 tax? Will this net gain or net loss change if the subsidy per worker fell to $5? Explain.

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 6SQP

See similar textbooks

Related questions

Q: Using a supply and demand analysis show first the labour market in equilibrium, and then show a) the…

A: The correct answer is given in thes second step.

Q: The demand for labor by a profit-maximizing firm is determined by: A. MPL = MC B. VMPL = MC C. MC =…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: Assume a monopsony uses only one factor, labor, L, to produce a final good, Q, which it sells in a…

A: Please find the answer below.

Q: For a profit-maximizing monopsonist (only person hiring), they will hire labor until the MCE=MRPE.…

A: There is only labor as a factor of production. Total cost = Workers * Wage MC = (change in total…

Q: A worker earns $10 per hour at his job each week. Now suppose this worker is eligible for a 20…

A: a)Post subsidy wage rate=20% of $10 20*10/100=2 Therefore wage rate post subsidy 10+2=$12.

Q: Brenda owns a construction company that employs bricklayers and other skilled tradesmen. Her firm’s…

A: This case study is an example of perfect competition where there are number of firms but the…

Q: The marginal cost of labor (MCL) is equal to what for a firm that operates in a competitive labor…

A: In a perfect competition market, Marginal cost of labor which is wages equals the value of the…

Q: Suppose that the wage rate is $47 per hour and the price of the product is $2. Values for output and…

A: Profit-maximizing labor is when VMPL = Wage rate VMPL = MPL x Output price where MPL = Change in q /…

Q: Ritholtz references a research paper that examined 38 states and regions from 1979 to 2016. This…

A: Research is described as a methodical examination of a specific subject or problem using scientific…

Q: The demand for labor for a firm with market power in the output market equals ______.

A: A monopoly alludes to a firm which has a product with practically no substitute in the market.

Q: monopsony labor market without min. wage monopsony labor market with "optimal" min. wage ME ME P2 Pa…

A: In a monopsony labor market, a sole or dominant employer exists in the labor market. It means the…

Q: Illustrate and carefully explain the impact of an increase in the income tax rate from 25percent to…

A: please find below the answer.

Q: . The payroll tax for unemployment insurance in a certain nation taxes all wages up to a maximum per…

A: Answer: Given, Tax rate = 5% Wages taxable per worker =upto $30,000 Introduction: Average tax rate…

Q: The Zippy Paper Company has no control over either the price of paper or the wage it pays…

A: Marginal revenue product is the marginal revenue gained from employing one more unit of input. It is…

Q: Explain if the statement is true, false or uncertain: If the demand curve (marginal revenue product)…

A: Answer: Given, The demand curve (marginal revenue product): w=100-L The supply curve (average cost):…

Q: Some unions limit the no. of union members and require employers to hire union members only,…

A: Illustrate the equilibrium wage and quantity of labor using a diagram with the demand and supply…

Q: What happens to the labor supply curve of single mothers when TANF benefits are introduced?

A: The labor supply curve moves upward of single mothers when TANF benefits are introduced.

Q: 3. Suppose that the wage rate is $16 per hour and the price of the product is $ 2.0. Values for…

A: Answer; Labor is demanded where Value of Marginal product of labor is equal to wage rate.…

Q: Which of the following statements proves the existence of wage discrimination? a. Male prison…

A: find below the answer.

Q: The payroll tax for unemployment insurance in a certain nation taxes all wages up to a maximum per…

A: Marginal tax rate is equal to the tax rate imposed on the last dollar of income. Average tax rate…

Q: Which one of Marshall’s rules suggests why labor demand should be relatively inelastic for public…

A: The public school teachers and the nurses are a part of the production of some price inelastic…

Q: Consider a government which collects tax on wages received by workers to provide public goods. This…

A: Given information Labor demand curve W=400-2L Ls=190 Government imposing tax $10 per unit in…

Q: Refer to the following diagram ofa monopsonistic labor market. MWC W3 W2 W, MRP Q, Q2 Q3 Labor If…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Suppose that Frances receives higher pay at her workplace than her colleagues do, even though they…

A: a) Wages that are higher than the market equilibrium are known as efficiency wages. Companies that…

Q: Illustrate and carefully explain the impact of an increase in the income tax rate from 25 percent to…

A: The demand curve for labour, under the ceteris paribus assumption, shows the amount of labor…

Q: How would the burden from a payroll tax be shared if the supply of labor was perfectly inelastic?…

A: Elasticity is a measure of a variable's sensitivity to changes in another variable; it is most…

Q: Consider the labour market for engineers, which is initially in equilibrium. Now, suppose…

A: Answer (A) The correct answer is option 'A' i.e., demand for engineers to shift the left.…

Q: Policymakers sometimes propose laws requiringfirms to give workers certain fringe benefits, such…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: Consider the labor market for electricians. The demand curve is downward sloping and the supply…

A: The increase in the wage makes it is a price floor or minimum wage control so the wage in the market…

Q: when denand for goods and services is high, firm are more likely to hire workers? true or false

A: A rise in the demand for goods and services encourages producers to increases the level of output.…

Q: What determines the demand for labor for a firm with market power in the output market?

A: Generally, the demand for labour depends on the demand for output. If the demand for the car is very…

Q: What would you expect to happen to wages in a monopsonistic labor market?

A: A monopsony is a business environment in which only one purchaser, the monopsonist, is present. A…

Q: Give the purpose and the application of the Labour Relations Act?

A: The main purpose of labor relation act is to make advance economic development, try to develop…

Q: Most economists believe that only part of the gap between the wages of white males and the wages of…

A: Note: We will answer the first question as the exact one was not specified. Please resubmit a new…

Q: What is the marginal cost of labor for a firm that operates in a competitive labor market? How does…

A: In the ‘competitive market’ there exist many numbers of buyers & sellers. The sold products are…

Q: In New York workers face a state income tax rate of about 6.5%. In addition, workers who reside in…

A: City tax is levy for utility service provided by government like police service , garbage cleaning…

Q: What happens if the government sets a minimum wage in a monopsony labor market? The marginal factor…

A: A monopsony refers to a market where there is only one buyer. The market is called an oligopsony…

Q: When Alan Greenspan (an economist who wouldlater chair the Federal Reserve) ran a consulting firmin…

A: Alan Greenspan uses a different and unique business strategy which others were not using to make his…

Q: Does a gap between the average earnings of men and women, or between whites and blacks, prove that…

A: In labour economics, discrimination is mainly associated with the employer and employee…

Q: the monopsonistic labor market, the MRC L = P L (wage). true or false?

A: When there is only one buyer or, in the case of the labor market, only one employer, the market is…

Q: You are less likely to find a monopsonistic labor market in a large city such as…

A: Markets are different types on the basis of number of sellers and buyers. Also market can be…

Question

a. What is the effect of this policy on the market for truck drivers?

b. How is the incidence of this tax distributed between employers and employees? Will this distribution change if the tax fell to $5? Explain.

c. What is the net gain or net loss to the society from a $10 tax? Will this net gain or net loss change if the subsidy per worker fell to $5? Explain.

Video Video

Expert Solution