The demand curve for gardeners is Ed = 39 - 2w, where E = the number of gardeners, and w = the hourly wage. The supply curve is Es= 4 + 3w.
a) Graph the demand and the supply curve.
b) What is the equilibrium wage and equilibrium number of gardeners hired?
c) Suppose the town government imposes a $3 per hour tax on all gardeners.
i. Draw the new (after-tax) demand curve in terms of the employee wage.
ii. What is the effect on the equilibrium wage and the equilibrium number of gardeners hired?
iii. How much does the gardener receive?
iv. How much does the customer pay?
v. How much does the government receive as tax revenue?