Figure 18-7 -Refer to Figure 18-7. Assume W1 = $15 and W2

question 118

Multiple Choice

Figure 18-7
-Refer to Figure 18-7. Assume W1 = $15 and W2 = $12, and the market is always in equilibrium. A shift of the labor supply curve from S1 to S2 would

• A) increase the value of the marginal product of labor by $3.
• B) decrease the value of the marginal product of labor by $3.
• C) decrease the value of the marginal product of labor by more than $3.
• D) not change the value of the marginal product of labor.

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Definitions:

Average Tax Rate

The average tax rate is the percentage of total income that an individual or corporation pays in taxes, calculated by dividing total tax paid by total income.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, reflecting the rate applied to each additional dollar of income.

Social Security Tax

A payroll tax collected to fund the Social Security program, which provides benefits to retirees, disabled individuals, and survivors.

Taxable Income

The portion of income subject to tax by the government after all deductions and exemptions.