How does a competitive firm's demand for labor react to a specific tax on each unit of output it sells?
What will be an ideal response?
The price the firm receives for each unit of output is now - t instead of p where is new price paid by consumers. Assuming that does not exceed p by the full amount of the tax, the demand for labor shifts downward and intersects the wage line at a lower quantity of labor.
Economics
You might also like to view...
If marginal utility is positive but diminishing, as more units of a good are consumed, then the total utility from the good must be
A) falling. B) positive and rising at an increasing rate. C) positive and rising at a decreasing rate. D) positive and rising at any rate.
Economics
The expected rate of inflation is built into current nominal rates of interest.
a. true b. false
Economics