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Consider the market for unskilled labor in Iowa. Suppose the state government votes to impose a $3.00 tax on each worker's ourly wages. The labor supply curve will shift up by $3.00. Use the points to trace out the tax revenue the government will ain from this tax and answer the questions. Hourly wage ($) 20 19 18 17 16 15 14 13 12 11 10 87654 Supply + tax Supply Demand Tax Revenue

Consider the market for unskilled labor in Iowa. Suppose the state government votes to impose a $3.00 tax on each worker's ourly wages. The labor supply curve will shift up by $3.00. Use the points to trace out the tax revenue the government will ain from this tax and answer the questions. Hourly wage ($) 20 19 18 17 16 15 14 13 12 11 10 87654 Supply + tax Supply Demand Tax Revenue

Microeconomics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
ChapterST2: The Economics Of Social Security
Section: Chapter Questions
Problem 6CQ
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Consider the market for unskilled labor in Iowa. Suppose the state government votes to impose a $3.00 tax on each worker's hourly wages. The labor supply curve will shift up by $3.00. Use the points to trace out the tax revenue the government will gain from this tax and answer the questions. Hourly wage ($) 20 19 18 17 16 15 14 13 32HD9 8 7 6 54321 12 11 10 Supply + tax Supply Demand 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100 Workers (in thousands) Tax Revenue
Transcribed Image Text:Consider the market for unskilled labor in Iowa. Suppose the state government votes to impose a $3.00 tax on each worker's hourly wages. The labor supply curve will shift up by $3.00. Use the points to trace out the tax revenue the government will gain from this tax and answer the questions. Hourly wage ($) 20 19 18 17 16 15 14 13 32HD9 8 7 6 54321 12 11 10 Supply + tax Supply Demand 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100 Workers (in thousands) Tax Revenue
Calculate the tax revenue generated per hour by the tax. tax revenue: $ 135000 Determine the portion of the tax borne by the workers. tax borne by the workers: $ 45000 Calculate the excess burden, also called deadweight loss, created by the tax. excess burden: $ 7500 O
Transcribed Image Text:Calculate the tax revenue generated per hour by the tax. tax revenue: $ 135000 Determine the portion of the tax borne by the workers. tax borne by the workers: $ 45000 Calculate the excess burden, also called deadweight loss, created by the tax. excess burden: $ 7500 O
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