Question: 2. Consider Providence, where the current demand for labor is 15,000 workers at a wage of $120 per day. Providence County imposed a business

2. Consider Providence, where the current demand for labor is 15,000 workers at a wage of $120 per day. Providence County imposed a business tax (without a corresponding change in public services) in town and this tax reduced the demand for labor by 1,000 workers. The employment multiplier in Providence is assumed to be 1.80. (15) (a) Calculate the direct effect (in the number of workers) and the multiplier effect (in the number of workers) (2) Also, calculate the total labor demand after the business tax. (1)

Step by Step Solution

★★★★★

3.31 Rating (163 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a 1 Direct Effect The direct effect is the initial change in labor demand due to the imposition of t... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 100 units for regular...

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...

I. Which of the following is correct? a) The pivot of the budget line shows the substitution effect while a slope gives the income effect. b) The pivot of the budget line shows the substitution...

For the project, Students should read Chapter 19 and then write a short Chapter Summary, T he world is a giant shopping mall, and Americans are big spenders. For example, the U.S. population is less...

John and Jane Doe are married retired taxpayers who care for their three-year-old grandson. The following information was provided to you as documentation necessary to prepare their 2017 tax return....

Can you please help me answer two questions based on the readings below. 1 How would you contrast the mainstream economics view of consumer behavior in 9.3, with the demand curve in general, and also...

IDEO Case Study Assignment What are features of IDEO's "Exploratory Phase"? (select all that apply) Team members share different insights they have gained in downloading sessions Extended interviews...

Consider and discuss the specific risks and nature of the company you will be auditing and create comprehensive work programs for the Inventory, Warehousing, and Payroll accounts and cycles. Submit a...

In a simplified model for taxes, a person will pay: 10% on the first $40,000 earned; 20% on the next $50,000 earned; 40% on the rest. For instance, a person earning $30,000 will pay $3,000 in taxes,...

Under what conditions does a companys auditor (the user auditor) have to consider the ICFR at the service organization?

2. What will the following code display in the lblAsterisks control? For intX As Integer = 1 To 2 For intY As Integer = 1 To 3 1b1Asterisks.Text = 1blAsterisks.Text & "*" Next intY lblAsterisks.Text...

Jarem Company showed $189,000 in prepaid rent on December 31, 2015. On December 31,2016, the balance in the prepaid rent account was $226,800. Rent expense for 2016 was $472,500. Required: 1. What...

Lehighton Chalk Company manufactures blackboard chalk for educational uses. The company's product is sold by the box at $50 per unit. Lehighton uses an actual costing system, which means that the...

Consider the following independent events: a. Loss on sale of an asset b. Decrease in accounts receivable c. Increase in prepaid insurance d. Depreciation expense e. Decrease in accounts payable f....

Stillwater Designs is a private company and outsources production of its Kicker speaker lines. Suppose that Stillwater Designs provided you the following transactions. a. Sold a warehouse for...

1. Of the five global product and communications strategies, which best describes 7-Eleven's approach? 2. On a scale of one to five, to what degree does 7-Eleven adapt its offering in each global...

During the year 90,000 units were sold. There was no beginning or ending work-in-process inventories, but there were 2,000 units of finished goods on hand at the end of the year. The total production...

Suppose the government sets an effective price floor (i.e., a price above equilibrium) in the market for oranges and agrees to buy all oranges that go unsold at that price. The oranges purchased by...

Leopold consumes only kidneys and liver. When the price of kidneys rises, Leopold responds by eating less liver. a. Can you determine whether liver is an inferior good for Leopold? b. Can you...

Every day Fred buys wax lips and candy cigarettes. After deciding how many of each to buy, he multiplies the number of sets of wax lips times the number of packs of candy cigarettes. The higher this...

A 65-year-old male can purchase either of the following annuities from a life insurance company for $50,000. A 25-year term annuity will pay $307 at the end of each month. A life annuity will pay...

Rashid wants to use $500,000 from his RRSP to purchase an annuity that pays him $2000 at the end of each month for the first 10 years and $3000 per month thereafter. Global Insurance Co. will sell...

How much longer will it take month-end RRSP contributions of $500 to accumulate $500,000 than month-end contributions of $550? Assume that the RRSP earns 7.5% compounded monthly. Round the time...