Q1. Describe the impact of a payroll tax on wages and employment in a competitive industry. Why is part of the tax shifted to workers? What is the deadweight loss of the payroll tax?
Q2. Why does the payroll tax have the same impact on wages and employment regardless of whether it is imposed on workers or on firms?
Q3. Show how the imposition of a minimum wage on a monopsony can increase both wages and employment.
Q4. Suppose that the government raises the minimum wage by 20 percent. Thinking of the four Marshall's rules of derived demand as they apply to a particular industry, analyzes the conditions under which job loss among teenage workers in that industry would be small.
Q5. Let total market demand for labor be represented by ED = 1,000 - 50w where ED is total employment and w is the hourly wage.
1) What is the market clearing wage when total labor supply is represented by?
ES = 100w - 800? How many workers are employed? How much producer surplus is received at the equilibrium wage
2) Suppose the government imposes a minimum wage of $16. What is the new level of employment? How much producer surplus is received under the minimum wage?