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Wage rate (dollars per hour) 12.00 10.75 10.00 0 LS+ tax LS LD 37 40 Quantity of labor (hours per week) 10) Assume that
Wage rate (dollars per hour) 12.00 10.75 10.00 0 LS+ tax LS LD 37 40 Quantity of labor (hours per week) 10) Assume that the government imposes an income tax on labor, and the figure above illustrates the situation. a. How many hours of labor per week were employed before the tax? b. How many hours of labor per week are employed after the tax? c. What was the equilibrium wage rate before the tax? d. What is the equilibrium wage rate after the tax? e. What is the total tax revenue of this income tax? f. Calculate the tax burdens on employers and workers. Whose tax burden is bigger, and why?
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Foundations Of Economics
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