Intermediate Microeconomics Question $2$

$2$a$)$What is the Laffer curve?

$2$b$)$Why would you expect the tax revenue to be $0$when the tax rate was equal to $0$and when also when the tax rate was equal to $1?$

$2$c$)$Suppose that the market demand curve for labour is flat at some wage bar$($w$).$Suppose the supply curve of labour S$($w$)$has a conventional upward slope. The equilibrium labour supplied is L$^(\text{'})$in this situation as shown below.

Now suppose the government levies a tax on labour at the rate t$.$This means if the firm pays bar$($w$),$the worker only gets w$=(1-$t$)$bar$($w$).$On your answer sheet, redraw the above figure. In the same figure, draw the new labour supply curve after the tax on labour has been imposed and show the new equilibrium labour supplied L$^(*)$after the tax in comparison to the old equilibrium L$^(\text{'}).$

Solve the questitions which consist drawing of new supply curve as mentioned in $2$C $($look the picture for first version$).$Make sure to show all your working and calculations for significant partial credit.

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