A Tax on Labor Causes a Smaller Drop in Equilibrium

question 102

Multiple Choice

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

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

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Definitions:

Price Of Resource

The financial cost required to obtain or use a particular resource.

Producers

Entities or individuals that create goods or provide services, playing a crucial role in the supply side of an economy.

Resource Prices

refer to the costs associated with procuring the natural, human, and capital inputs required for the production of goods and services.

Incentive

A factor, often a reward or penalty, that motivates an individual or entity to act in a certain way.