The following graph shows the labor market for research assistants in the fictional country of Collegia. The equilibrium wage is $10 per hour, and equilibrium number of research assistants is 250. Suppose the government has decided to institute a $4-per-hour payroll tax on research assistants and is trying to determine whether the tax sh e levied on the employer, the workers, or both (such that half the tax is collected from each side). Use the graph input tool to evaluate these three proposals. Entering a number into the Tax Levied on Employers field (initially set at zero dollars hour) shifts the demand curve down by the amount you enter, and entering a number into the Tax Levied on Workers field (initially set at zero per hour) shifts the supply curve up by the amount you enter. To determine the before-tax wage for each tax proposal, adjust the amount in th Wage field until the quantity of labor supplied equals the quantity of labor demanded. You will not be graded on any changes you make to this g ote: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. 18 Supply 16 14 12 H Demand 1 I I I WAGE (Dollars per hour) 4 2 0 0 I I 50 100 150 200 250 300 350 400 450 500 LABOR (Number of workers) Graph Input Tool Market for Research Assistants Wage (Dollars per hour) Labor Demanded (Number of workers) Demand Shifter Tax Levied on Employers (Dollars per hour) 4 310 0 Labor Supplied (Number of workers) Supply Shifter Tax Levied on Workers (Dollars per hour) 190 0
The following graph shows the labor market for research assistants in the fictional country of Collegia. The equilibrium wage is $10 per hour, and equilibrium number of research assistants is 250. Suppose the government has decided to institute a $4-per-hour payroll tax on research assistants and is trying to determine whether the tax sh e levied on the employer, the workers, or both (such that half the tax is collected from each side). Use the graph input tool to evaluate these three proposals. Entering a number into the Tax Levied on Employers field (initially set at zero dollars hour) shifts the demand curve down by the amount you enter, and entering a number into the Tax Levied on Workers field (initially set at zero per hour) shifts the supply curve up by the amount you enter. To determine the before-tax wage for each tax proposal, adjust the amount in th Wage field until the quantity of labor supplied equals the quantity of labor demanded. You will not be graded on any changes you make to this g ote: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. 18 Supply 16 14 12 H Demand 1 I I I WAGE (Dollars per hour) 4 2 0 0 I I 50 100 150 200 250 300 350 400 450 500 LABOR (Number of workers) Graph Input Tool Market for Research Assistants Wage (Dollars per hour) Labor Demanded (Number of workers) Demand Shifter Tax Levied on Employers (Dollars per hour) 4 310 0 Labor Supplied (Number of workers) Supply Shifter Tax Levied on Workers (Dollars per hour) 190 0
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter22: Inflation
Section: Chapter Questions
Problem 18RQ: What is deflation?
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