If the Labor Supply Curve Is Nearly Vertical,a Tax on Labor

question 20

Multiple Choice

If the labor supply curve is nearly vertical,a tax on labor

• A)has a large deadweight loss.
• B)raises a small amount of tax revenue.
• C)has little impact on the amount of work that workers are willing to do.
• D)results in a large tax burden on the firms that hire labor.

---

Definitions:

C + I

An economic formula representing consumer spending (C) plus investment spending (I), components of a country's GDP calculation.

Disposable Income

Households' financial resources for expenditure and savings following income tax deductions.

Savings

Money set aside for future use rather than spent immediately.

Savings

The portion of income not spent on current consumption or taxes, instead set aside for future use or investment.