The graph below represents equilibrium in a competitive labor market both before and after a payroll tax which is levied on the employer has been implemented. Before the payroll tax, the equilibrium quantity of labor was 55 units. Supply curve S1 represents supply as a function of what firms pay, including the tax. S0 represents labor supply as a function of what workers take home.

a. What is the amount of the per-unit payroll tax?

b. What is the per-unit price of labor faced by firms immediately after the tax is levied?

c. What wage will workers receive immediately after the tax is levied?

d. What are the quantity of labor demanded and the quantity of labor supplied immediately after the tax is levied?

e. If, after the tax is levied, the equilibrium quantity of labor settles at 40 units, what will be the new equilibrium wage?

f. If, after the tax is levied, the equilibrium quantity of labor settles at 40 units, what are the amounts of the workers’
share of the tax burden, the firms’ share of the tax burden, and the total tax collection?