Question

6. Who should pay the tax? The follawing graph shows the labor market for research assistants in the fictional country of Collegia. The equilibrium wage is $10 per hour, and the equilbium number of research assistants is 250. Suppose the govemment has decided to institute a $4-per-hour payroll tax on research assistants and is trying to decermine 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 zool to evaluate these three proposals. Entening a number into the Tax Levied on Empioyers field (initially ser at zero dollars per hour) shifts the demand curve down by the amount you enter, and entening a number into the Tax Levied on Workers fied (initially set at zero 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 quanbity of labor supplied equais the quanbty 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 hange accordingly Graph Input Tool Market for Research Assistants 2) 18 16 14 12 10 wage Collars per our Labor Demanded Number of workers) Sur ply 825 Labor Supplied fNumber or workers) Demand Shifter Supply Shifter De and Tax Levied on Employers Dola's per hour) Tax Levied on Workers (Dollars per hour) 50 100 150200 250 300 150 40 450 50 LABOR (Number of workers)

Answer 1