Suppose there is a government that levies a tax on wages amounting to 20% of a worker's earnings (wL). Assume that the labour supply is fixed at L*=150, that the production function is described by a Cobb-Douglas function: Q(L) = 20L1/3, and the market price of the good is P = 33.

a) Find pre-tax and post-tax demand function of labour.

b) What is the incidence of tax and tax revenue? Give the reason that determines these results.

c) Assume now that the labour supply is given by L=150w. Calculate the new salary of equilibrium. How is the incidence of the tax distributed among workers and employers and what is the deadweight loss of the tax?