Question

QUESTION 20 The federal government currently levies a 15.3 percent payroll tax (7.65 percent on both the employer and employee) on the wages of all workers. If the demand for laboris relatively elasti when compared to the inelastic supply of labor, the burden of this tax will a. be divided equally between employees and employers b. Its impossible to tell from this information c. fall primarily on employees d.tall primarily on employers.

Answer 1

Answer : Option C iscorrect.As supply of labor is inelastic because there should be inelastic supply of labor which has been resulted that the burden of tax has been primarily source on employees and there inelastic supply and wages reduced there supply can be reduced.