Q) The income tax for people who make $50k to $100k a year was increased and is now set at a flat tax rate of $15k. (For the question parts below, feel free to make several plots if you think that makes your answers clear.)

a. Plot the market for labor for people who make this much money per year. Identify the market equilibrium. Make sure to label all parts of your plot.

b. On your plot, show how the income tax changes the labor market and market equilibrium. Show the tax rate. (Assume that it is easy to find a new job.)

c. With areas on your plot, indicate how much of the income tax in borne by employees, how much is borne by employers, and the total income tax revenue given to the government.

d. What is the wage/salary that workers take home? (Label on your plot.)

e. Why are some of the income tax borne by employers if employees are required to pay the tax?

f. Under what condition would employees pay 100% of the income tax? Show this with a plot.

g. Under what condition would employers pay 100% of the income tax? Show this with a plot.

h. Is this income tax justified, if the social planner's goal is to increase social welfare?