If the Labor Supply Curve Is Very Elastic, a Tax

question 201

Multiple Choice

If the labor supply curve is very elastic, a tax on labor

• A)has a large deadweight loss.
• B)raises enough tax revenue to offset the loss in welfare.
• C)has a relatively small impact on the number of hours that workers choose to work.
• D)results in a large tax burden on the firms that hire labor.

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Definitions:

Psychological Theory

A framework designed to explain and predict mental processes and behaviors.

Independent Variables

Factors that are manipulated by researchers to observe their effect on dependent variables in experiments.

Dependent Variables

In experimental research, the variable that is being measured or tested, and is expected to change as a result of manipulations to the independent variable.

Experimental Test

An experimental test is a research method where the researcher manipulates one or more variables under controlled conditions to study their effect on other variables.