The figure below depicts the supply (S) and demand (D) for labor in a perfectly competition market, along with the after-tax supply (S'), showing the pre-tax wage workers would need to be paid in order to for their after-tax income to satisfy their true labor supply curve. Recall that workers supply labor and employers demand labor. Wager rate per hour 12 10 7 5 500 650 700 800 S' (as a function of what firms pay) S (as a function of what workers take home) Units of labor Suppose the tax is imposed on the employers. When the tax is first imposed, firms cannot suddenly pay their workers less since the workers have contracts that specify the wage. The result will be . а. an equilibrium in the labor market. O b. an excess supply of labor or 100 units. OC. an excess demand for labor of 100 units. Od. an excess supply of labor of 150 units. Hint: How much will the firms have to pay when the tax is implemented? What is the demand at that wage rate? What is the supply at that wage rate?

The figure below depicts the supply (S) and demand (D) for labor in a perfectly competition market, along with the after-tax supply (S'), showing the pre-tax wage workers would need to be paid in order to for their after-tax income to satisfy their true labor supply curve. Recall that workers supply labor and employers demand labor. Wager rate per hour 12 10 7 5 500 650 700 800 S' (as a function of what firms pay) S (as a function of what workers take home) Units of labor Suppose the tax is imposed on the employers. When the tax is first imposed, firms cannot suddenly pay their workers less since the workers have contracts that specify the wage. The result will be . а. an equilibrium in the labor market. O b. an excess supply of labor or 100 units. OC. an excess demand for labor of 100 units. Od. an excess supply of labor of 150 units. Hint: How much will the firms have to pay when the tax is implemented? What is the demand at that wage rate? What is the supply at that wage rate?

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 2SQP

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