A Tax on Labor Causes a Larger Drop in Equilibrium

question 29

Multiple Choice

A tax on labor causes a larger drop in equilibrium wages when:

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

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