If supply of labor is perfectly inelastic, then the incidence of a payroll tax will be __________
Workers bear the full payroll tax when labour supply is perfectly inelastic. The quantity of labour supplied does not change as the net wage falls, so the tax is absorbed by…
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If supply of labor is perfectly inelastic, then the incidence of a payroll tax will be __________
Answer and explanation
Correct answer B
Workers bear the full payroll tax when labour supply is perfectly inelastic. The quantity of labour supplied does not change as the net wage falls, so the tax is absorbed by a reduction in the wage workers receive.
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Himachal Pradesh SET (HP SET)