A Tax Elasticity of Supply Equal to

question 114

Multiple Choice

A tax elasticity of supply equal to .21 indicates that

• A) Employers will not hire any workers if tax rates increase.
• B) Employers will hire more workers if tax rates increase.
• C) Workers will not cut back on the number of hours worked if tax rates increase.
• D) Workers will cut back on the number of hours worked if tax rates increase.

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Definitions:

Primary Labor Market

Refers to high-skilled, high-paying jobs that usually require a higher level of education or training, often offering benefits and job security.

High School Diploma

A certificate awarded upon successful completion of secondary education, signifying that the recipient has met the required educational standards.

Income Effect

Adjustments in the income of people or economic systems and the consequent impacts on how much of a good or service is desired.

Substitution Effect

The change in consumption resulting from a change in the price of a good, leading consumers to replace more expensive items with cheaper alternatives.