Suppose this was the labor market (No taxes):

MV =125-0.25*Q

MC =10+0.9*Q

Suppose a social security (per unit) tax of $14was imposed onbothdemanders and suppliers.

Question 1

By how much did the laborafter-taxwage decrease?

Question 2

What percentage of total taxes do workers pay?

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You work for the state government and they promise you a lump-sum pension payment of $1,000,000 in 40 years.

The government assumes they'll get a8% rate of return over those 40 years.

Suppose the government only gets a5% return.

Question 3

By what percentage will your pension be under-funded after 15 years?

Suppose the government does nothing to address the under-funding problem

and over the 40 years it gets a5% rate of return.

Question 4

How much ($) will you get at the end of 40 years?