If the Labor Supply Curve Is Very Elastic, a Tax

question 201

Multiple Choice

If the labor supply curve is very elastic, a tax on labor

• A)has a large deadweight loss.
• B)raises enough tax revenue to offset the loss in welfare.
• C)has a relatively small impact on the number of hours that workers choose to work.
• D)results in a large tax burden on the firms that hire labor.

---

Definitions:

Vigorously Enforced

Implemented or applied with strong effort or determination, often referring to laws, rules, or policies.

Right to Strike

The legal right of workers to refuse to work as a form of protest against conditions or practices they consider unjust.

NAFTA

The North American Free Trade Agreement, a treaty entered into by the United States, Canada, and Mexico; it went into effect on January 1, 1994, and has been replaced by the USMCA (United States-Mexico-Canada Agreement) to facilitate free trade by reducing and eliminating trade barriers.

Mexican Constitution

The fundamental legal document of Mexico, outlining the structure of the government, rights of citizens, and separation of powers, enacted in 1917.