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:

Jasmonic Acid

One of a group of lipid-derived plant hormones that affect several processes, such as pollen development, root growth, fruit ripening, and senescence; also involved in defense against insect pests and disease-causing organisms.

Prostaglandins

Lipid compounds that have diverse hormone-like effects in animals, including inflammation regulation and smooth muscle contraction.

PIF3

Phytochrome Interacting Factor 3, a protein that regulates plant responses to light.

Phytochrome Signal Transduction

A biochemical pathway in plants by which light signals are converted into cellular responses, mediated by phytochrome proteins.