4. (20 points) Assume that the labor demand curve expression is: and the labor supply curve expression is: w=35-3E w=5+2E where w is the labor market wage and E is the level of employment. Questions: 1. Calculate the equilibrium wage (w*) and employment level (E) (2 points) 2. Calculate the worker and producer surplus in equilibrium. (6 points) Now assume that the government levies a payroll tax of $5 on the firms. 3. Calculate the new equilibrium wage (w**) and employment level (E**) (2 points) 4. How have producer and worker surpluses changed following the introduction of the tax? (4 points) Suppose that the payroll tax is now levied on the workers 5. Determine the new labor market equilibrium (w*** and E***) (2 points) Finally, suppose that the government, to encourage employment, pays a subsidy of $5 to the employers. 6. What is the salary of the worker, and how much of it is paid by the firm? (4 points)