If the Price Elasticity of Supply of Labor Is Equal

question 33

Multiple Choice

If the price elasticity of supply of labor is equal to 0.5 and the price elasticity of demand for labor is -2, then which of the following is likely to result from a tax on labor earnings?

• A)The tax will be fully borne by workers.
• B)Some of the tax will be shifted to employers as market equilibrium wages increase.
• C)Market equilibrium wages will decline.
• D)There will be no effect on market equilibrium wages.

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Definitions:

Sebaceous Gland

A small oil-producing gland present in the skin of mammals, which secretes sebum into the hair follicles to lubricate the skin and hair.

Hair Follicle

A dynamic organ located in the dermal layer of the skin, from which hair grows, and is a site for sebaceous glands and nerve endings.

Sebaceous Gland

A gland in the skin that produces sebum, an oily substance that helps to lubricate and protect the skin.

Epidermis

The outermost layer of skin, serving as a protective barrier against environmental threats and regulating water loss from the body.