A Tax on Labor Causes a Smaller Drop in Equilibrium

question 136

Multiple Choice

A tax on labor causes a smaller drop in equilibrium employment when:

• A) the labor demand curve is flat than when it is steep.
• B) the labor demand curve is steep than when it is flat.
• C) the labor supply curve is steep than when it is flat.
• D) the labor supply curve is flat than when it is steep.

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Definitions:

Tariffs

Levies enforced by a government on goods that are imported or exported.

United States

A country located in North America, comprising 50 states, a federal district, five major self-governing territories, and various possessions.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price over a specific period of time.

U.S. Tariff

A tax imposed by the United States government on imported goods and services, intended to protect domestic industries and generate revenue.