Problem
Consider an example of DWL in the labour market. Suppose the demand for labour is given by the fixed gross wage W = $16. The supply is given by W = 0.8L.
(a) Illustrate the market geometrically.
(b) Calculate the equilibrium amount of labour supplied, and the supplier surplus.
(c) Suppose a wage tax that reduces the wage to W = $12 is imposed. By how much is the supplier's surplus reduced at the new equilibrium?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.