Rhode Island Has Enacted a Substantial Increase in the Tax

question 145

Multiple Choice

Rhode Island has enacted a substantial increase in the tax on employers that finances the workman's compensation system.For some employers, the tax is about $25 per $100 paid in wages.Employers claim they cannot afford to pay the tax.Under which of the following conditions will the actual burden of the tax fall on employers?

• A)The employers' demand for labor is perfectly elastic.
• B)The supply of labor is perfectly inelastic.
• C)The employers' demand for labor is perfectly inelastic.
• D)The demand for the good they produce must be perfectly inelastic.

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