By drawing a diagram of labor demand and labor supply curves, illustrate how workers and firms share the benefits of employment subsidy. Employers can receive $t from the government for each worker they hire. Suppose that labor supply is perfectly inelastic while labor demand is very elastic (but not perfectly elastic). Who receives relatively more benefit? Or does one party receive the entire benefit? If so, who? Explai

By drawing a diagram of labor demand and labor supply curves, illustrate how workers and firms share the benefits of employment subsidy. Employers can receive $t from the government for each worker they hire. Suppose that labor supply is perfectly inelastic while labor demand is very elastic (but not perfectly elastic). Who receives relatively more benefit? Or does one party receive the entire benefit? If so, who? Explai

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 5P

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The demand curve for gardeners is G(D) = 19 – W, where G = the numberof gardeners, and W = the hourly wage. The supply curve is G(S) = 4 + 2 W . a. Suppose the town government imposes a $2 per hour tax on all gardeners. Indicate the effect of the tax on the market for gardeners.What is the effect on the equilibrium wage and the equilibrium number of gardeners hired? How much does the gardener receive? Howmuch does the customer pay? How much does the government receiveas tax revenue?
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