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Suppose the government imposes a tax on labor income. Which of the following describe the effect of the tax in the labor mark
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Answer #1

Answer: (E)

The tax burden shall be decided based on the price elasticity of demand and supply.

high elasticity of supply of labor, more burden shall be more demanders but if demand more labor elastic, more burden shall be faced by the workers.

the imposition of tax reduces the equilibrium labor, thus deadweightloss is created.

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