Consider the market for interior painters. The demand curve for painters is L = 19 – w, and the supply curve is L = 4 + 2w, where L is the number of painters and w is wage.
a) Find the equilibrium wage and number of painters in this market. Graph your work.
b) Suppose the town government imposes a $2 payroll tax on the wages of painters. What is the change in employment? How much do painters receive after the tax? How much due employers pay? How much does the government collect in revenue?