When the Supply Curve of Labor Is Perfectly Inelastic and a Social

question 83

Multiple Choice

When the supply curve of labor is perfectly inelastic and a social security tax is collected partly from employers and partly from employees,the burden of the tax is:

• A)entirely borne by the employees.
• B)entirely borne by the employers.
• C)borne by both the employers and the employees.
• D)borne by the employers only if labor demand is elastic.

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Definitions:

Incremental Costs

These are the additional costs incurred when increasing the production volume or taking on a new project.

Incremental Benefits

The additional benefits associated with a particular decision or action, compared to not taking that action.

Variable Production Costs

Costs that fluctuate with the level of output, including expenses like raw materials and direct labor.

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or sold, including lease payments, wages, and insurance fees.