Question

Figure 1: A Producer Tax SUPPLY with tax 500 600 7. The American Federation of Labor (AFL) is a collection of labour unions that was formed in 1886 to protect the interests of unionized workers. In the 19th Century, the AFL opposed immigration. From an economic perspective, why? (A) Immigrants do not bring shared cultural values, (B) Immigrants overwhelmingly vote Republican. (C) Immigrants can harm the productivity of AFL workers. (D) Immigrants compete for jobs with AFL workers, causing wages to drop. The next 3 questions involve the above diagram, which depicts a producer tax of $3 per unit. 8. What burden of the tax is borne by consumers? (A) $1 (B) $2 (C) $3 (D) $4

Answer 1

7. The labour unions are created for to protect the interests of the labor and there by increase the wages. The immigration increase the labour supply in the country and put downward pressure on the wages, which is not favored by the unionized workers. When there is an increase in the immigration the labour supply increases and the labour supply curve will shifts downwards , so the wages will drop.

Ans: D). Immigrants compete for jobs with AFL workers , causing wages to drop.

S+TAX Dead weight loss Price Price consumers pay 10 Price producers 8 receive 600 500 Quantity

When there is a tax on the seller , it adds to the cost of production to the seller so they cut the production to compensate the increased cost. The burden of the tax can be borne by either seller , buyer or both it depends on the respective price elasticity of demand and supply.

8. The burden of the tax borne by consumers is $ .

9. Dead weight loss

  $=\binom{1}{2}bh$

  $=\binom{1}{2}100\times 3$

$=150.$

10. The price received by producers $ .