Use the following labor market data to determine the answers to (a) through (d):

a. Is this tax progressive? Explain.
b. What is the before-tax equilibrium wage rate?
c. What effect does the tax have on the number of hours of work supplied and the market wage rate?
d. If the labor supply curve were highly elastic, rather than perfectly inelastic, how would your answers to (c) change?

Transcribed Image Text:

(1) Wage (2) Quantity (3) Quantity Supplied (4) Tax per Rate Demanded Hour $30 $10 14 22 24 18 22 18 22 22 6. 12 26 22 4 22 30