MyLab Economics with Pearson eText -- Access Card -- for Microeconomics
2nd Edition
ISBN: 9780134519517
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Chapter 11, Problem 13Q
To determine
The differences in the effect of identical
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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 150.
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…
Economists Conclude that a tax on the revenues of firms will be shifted in part to consumers of the products of those firms in the form of higher prices. However, they believe that a tax on the rent of land usually cannot be shifted and must be paid entirely by the landlord. What explains the difference?
Consider a competitive labor market. Using the model of how income is determined in a labor market, describe the effects on wages and number of individuals employed of an increase in the productivity of labor in that market. What will happen and why? In your answer, be sure that you describe why the supply and demand curves are shaped as they are.
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MyLab Economics with Pearson eText -- Access Card -- for Microeconomics
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- Suppose that the market for labor is initially in equilibrium. An increase in the price of output will cause the equilibrium wage a. and the equilibrium quantity of labor to fall. b. and the equilibrium quantity of labor to rise. c. to rise and the equilibrium quantity of labor to fall. d. to fall and the equilibrium quantity of labor to rise.arrow_forwardHow do you legally reduce labor surplus? Give an example for each.arrow_forwardThe graph below provides a supply and demand curve for food servers, complete 1a – 1d using the graph. 1.a. The equilibrium wage and the number of food servers employed per day, respectively, are: 1.b. Suppose that in the interest of boosting incomes of the working poor, Congress imposes a minimum wage of $6.00 per hour. This minimum wage rate creates a(n): 1.c. Assume that both input and output markets are perfectly competitive. If one additional server increases the number of meals sold by four per day and each meal sells for $10, each additional food servers will be paid: 1.d. If the equilibrium wage rate increased, the cause could be that either:arrow_forward
- Which one of the following statements is incorrect? a) Equilibrium in a perfectly competitive labour market occurs where the demand for labour is equal to the supply of labour. b) Equilibrium in a perfectly competitive labour market occurs where the quantity of labour demanded is equal to the quantity of labour supplied. c) Equilibrium in a perfectly competitive labour market is the result of the interaction between the demand for labour and the supply of labour. d) The individual supply of labour bends backwards when the income effect becomes stronger than the substitution effect.arrow_forwardRelated to the theory of equilibrium in the labor market. Describe the impact of the following policies on equilibrium in the labor market in detail (Assumption: Labor supply is elastic): a. Payroll Tax imposed on companies.b. Imposition of Income Tax which is borne by employees.c. Income Subsidy Imposition (Payroll Subsidy)arrow_forwardReferred to the above graph of the labor market. The government decides to impose a wage tax as shown on the graph. If the number of workers hired after the imposition of the tax is 800 then the total amount of tax is $___arrow_forward
- When using a supply-and-demand model to illustrate how land rents are set, economists typically draw the supply curve as a vertical line because: a. The supply of land is fixed. b. The supply of land is perfectly inelastic. c. The quantity supplied of land does not increase when rents go up. d. All of the abovearrow_forwardIn a competitive labor market, the demand for and supply of labor determine the equilibrium wage rate and the equilibrium level of employment. Discuss the relationship between how these markets determine the wage rate and the quantity of labor that should be employed. Share an example, beyond your textbook, that demonstrates this relationshiparrow_forwardThe following graph shows the labor market for research assistants in the fictional country of Collegia. The equilibrium wage is $10 per hour, and the equilibrium number of research assistants is 200. 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…arrow_forward
- Which of the following is likely to shift the labor supply curve to the right, assuming all else equal? A rise in the wage rate A fall in the wage rate A rise in the immigration of workers in search of better work opportunities A fall in the population of a country due to a natural disasterarrow_forwardEconomic theory states that a wage set above the equilibrium will create a surplus of labor (unemployment). Are unions creating a surplus of labor? Explain your answer. Entrepreneurs absorb the risk of starting and running a company. Is Kennedy right about allowing employers to set the wage and not the employee? Explain your answer.arrow_forwardEconomics: Labor Economics Question: 1 In a competitive labor market if a payroll tax is imposed on the employers a.the burden of the tax will be borne by the employers b.the tax burden will be borne by the employees c.the tax burden will be shared by the employers and employees d. The tax burden will be imposed exclusively on the buyers of the product Question: 2 Refer to the following table: Labor Output Price 0 |0 |$5.00 | 1 | 16 | $5.00 | 2 | 31 | $5.00 | 3 | 45 | $5.00 | 4 | 58 | $5.00 | 5 | 69 | $5.00 | 6 | 78 | $5.00 | Assume that the labor market is perfectly competitive. Suppose the firm’s product demand is given by the column labeled D1. If the wage rate is $50 the firm will achieve maximum profit by hiring ___ workers. a.6 b.4 c.3 d.5 Question: 3 Which one of the following would be most likely to shift the labor supply curve to the left? a.an increase in the wage rate. b.achange in the indifference map following deterioration of working conditions c.a change in the…arrow_forward
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