Question

b. wnosnould pay the tax? The following graph shows the labor market for research assistants in the fictional country of Universala. The equilibrium wage is $10 per hour, and the equilibrium number of research assistants is 100. Suppose the government has decided to institute a $4-per-hour 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 half the tax is collected from each side) Use the graph input tool to evaluate these three proposals. Entering a number into the Tax Levied on Employers field (initially set at zero dollars per hour) shirts the demand curve down by the amount you eviter, and entering a number into the Tax Levied on Workers held (initially set at zoo dollars per hour) shifts the supply curve up by the amount you enter. To determine the before-tax wage for each tax proposal, adjust the amount in the Wage field until the quantity of labor supplied equals the quantity of labor demanded. 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 Market for Research Assistants Wage (Dolors per hour) Labor Demanded (Number of workers) Labor Supplied Number of workers) Demand Shifter Supply Shifter WAGE(Dollars per hour) Tax Levied on Employers Dolars per hour) Tax Levied on Workers (Doner hour)

Answer 1

Levied on Employer	Levied on workers	Quantity hired	after tax wage paid by employers	after tax wage received by workers
4	0	40	12	8
0	4	40	12	8
2	2	40	12	8

● None of the proposal is better than the other.

Reason-

Tax=$4

When tax is levied on employer, the demand curve shift left by $4 at each output level .

When tax is levied on worker, the supply curve shifts left by$4 at each output level.

When $2 tax is levied on both employer and worker both curve shift left by $2.

In each case, the quantity=40 and after tax wage is also same.

So no proposal is better