APLIA STUDENT QUESTION 6 CHAPTER 6 WITH
ANSWER 100% CORRECT
Who should pay the tax?
The following graph shows the labor market for research assistants in the fictional
country of Universalia. The equilibrium wage is $10 per hour, and the equilibrium
number of research assistants is 250.
Suppose the government has decided to institute a $4perhour payroll tax on research
assistants and is trying to determine whether the tax should be levied on the
employer, the workers, or both (such that each pays half the tax).
Use the graph input tool to evaluate these three proposals. Entering a number into the
Tax Paid by Employers field (initially set at zero dollars per hour) shifts the demand
curve down by the amount you enter, and entering a number into the Tax Paid by
Workers field (initially set at zero dollars per hour) shifts the supply curve up by the
amount you enter. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding
amounts in each grey field will change accordingly.
Graph Input
Tool
20
Market for Research Assistants
18 Wage 4
Sup ply
(Dollars per
16 hour)
Labor Labor
Demanded Supplied
14 (Number
(Number
of workers) of
12
10 workers)
8 Demand Shifter Supply Shifter
6
Deman Tax
d Tax Paid 0 0
4 Paid by
by
Workers
Employers
2 D- (Dollars
(Dollars
0 Tax per
per hour)
hour)
050 100 150 200 250 300 350 400 450
500
LABOR (Number of workers)
, APLIA STUDENT QUESTION 6 CHAPTER 6 WITH
ANSWER 100% CORRECT
For each of the proposals, use the previous graph to determine the new equilibrium
wage and number of research assistants hired. Then compute theaftertax amount paid
by employers (that is, the equilibrium wage plus any taxes the employer pays) and the
after
tax amount earned by research assistants (that is, the equilibrium wage minus any
taxes the worker pays).
Wage + Wage –
Tax Proposal Wage Quantity Employ Worker
Hired ers’s s’s
Taxes Taxes
Employers (Dollar (Numb rs)
Pay... Workers s per er of
Pay... hour) worke
ANSWER 100% CORRECT
Who should pay the tax?
The following graph shows the labor market for research assistants in the fictional
country of Universalia. The equilibrium wage is $10 per hour, and the equilibrium
number of research assistants is 250.
Suppose the government has decided to institute a $4perhour payroll tax on research
assistants and is trying to determine whether the tax should be levied on the
employer, the workers, or both (such that each pays half the tax).
Use the graph input tool to evaluate these three proposals. Entering a number into the
Tax Paid by Employers field (initially set at zero dollars per hour) shifts the demand
curve down by the amount you enter, and entering a number into the Tax Paid by
Workers field (initially set at zero dollars per hour) shifts the supply curve up by the
amount you enter. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding
amounts in each grey field will change accordingly.
Graph Input
Tool
20
Market for Research Assistants
18 Wage 4
Sup ply
(Dollars per
16 hour)
Labor Labor
Demanded Supplied
14 (Number
(Number
of workers) of
12
10 workers)
8 Demand Shifter Supply Shifter
6
Deman Tax
d Tax Paid 0 0
4 Paid by
by
Workers
Employers
2 D- (Dollars
(Dollars
0 Tax per
per hour)
hour)
050 100 150 200 250 300 350 400 450
500
LABOR (Number of workers)
, APLIA STUDENT QUESTION 6 CHAPTER 6 WITH
ANSWER 100% CORRECT
For each of the proposals, use the previous graph to determine the new equilibrium
wage and number of research assistants hired. Then compute theaftertax amount paid
by employers (that is, the equilibrium wage plus any taxes the employer pays) and the
after
tax amount earned by research assistants (that is, the equilibrium wage minus any
taxes the worker pays).
Wage + Wage –
Tax Proposal Wage Quantity Employ Worker
Hired ers’s s’s
Taxes Taxes
Employers (Dollar (Numb rs)
Pay... Workers s per er of
Pay... hour) worke
