The difference social security payroll tax makes between the employee and the employer.

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Chapter ST2, Problem 6CQ

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The difference social security payroll tax makes between the employee and the employer.

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Consider a perfectly competitive labor market with a very inelastic supply of labor. If a payroll tax is implemented, who would bear a larger portion of the tax burden? a.Mostly by the employer. b.Mostly by the employee. c.Split fairly evenly between the employer and the employee.

If labor supply is perfectly inelastic, the imposing a payroll tax that will be split between employers and employees will a) reduce employment. b) leave employment levels unchanged. c) cause the tax burden to fall exclusively on firms. d) cause the tax burden to fall exclusively on workers.

Which one is CORRECT about the effects of tax on welfare as compared to without tax? A. Consumer surplus will rise B. Producer surplus will rise C. Tax revenue will rise D. Total surplus will rise E. All of the above The effect of tax on deadweight loss becomes smaller when: A. demand is inelastic B. demand is elastic C. supply is inelastic D. supply is elastic E. A and C F. B and D Which one is CORRECT about the marginal and average costs? A. Marginal cost crosses both average variable cost and average total cost at their minimum points. B. Average fixed cost increases continuously as the level of output increases. C. Whenever marginal cost is greater than average total cost, average total cost is rising. D. All of the above Which of the following is an example of implicit costs? A. payments made by the firm to others B. opportunity cost of resources owned…