200 a 100 b % D Q 10 50 70 100 Figure 9.12 13.Currently,the social security payroll tax in the United States is evenly divided be weer employe Emplo yer must pay the government a tax of 6.2 percent of the wages they pay,and employees must pay 6.2 percent of the wages they receive.Suppose the tax was changed so that employers paid the full 12.4 percent and employees paid nothing.Would employees then be better off? If the labor market is competitive,that is,both employers and employees take the wage as given,then shifting an qual tax amount from the employee to the employer will have no effect on the amount of labor employed and on the wage kept by the employee after taxes.The equilibrium amount oflabor employed is determined by the total amount of tax paid by both employees and employers.This is represented by the difference between the wage paid by the empbyer and the wage received by the employee As long as the total tax doesn't change.the same amount of labor is employed and the wages paid by the the employee not change Hence,employees would be no better or worse off if the employers paid the full amount of the social security tax. 14.You know that if a tax is imposed on a particular product.the burden ofthe tax is shared by producers and consumers.You also know that the demand for automobiles is characterized by a stock adjustment process.Sup 20 percent sales tax issu ddenly mposed auto hare f the tax paid by consumers rise,fall,or stay the same over time?Explain briefly Repeat for a 50-cents-per-gallon gasoline tax. For products with demand characterized by a stock adjustment process the short-run demand curve is more elastic than the long-run demand curve because delay their purchases of these goods in the short run For examp. when may continue using the r version of the produe10 50 70 60 100 S D Q P a b c 100 200 50 Figure 9.12 13. Currently, the social security payroll tax in the United States is evenly divided between employers and employees. Employers must pay the government a tax of 6.2 percent of the wages they pay, and employees must pay 6.2 percent of the wages they receive. Suppose the tax was changed so that employers paid the full 12.4 percent and employees paid nothing. Would employees then be better off? If the labor market is competitive, that is, both employers and employees take the wage as given, then shifting an equal tax amount from the employee to the employer will have no effect on the amount of labor employed and on the wage kept by the employee after taxes. The equilibrium amount of labor employed is determined by the total amount of tax paid by both employees and employers. This is represented by the difference between the wage paid by the employer and the wage received by the employee. As long as the total tax doesn’t change, the same amount of labor is employed and the wages paid by the employer and received by the employee (after tax) will not change. Hence, employees would be no better or worse off if the employers paid the full amount of the social security tax. 14. You know that if a tax is imposed on a particular product, the burden of the tax is shared by producers and consumers. You also know that the demand for automobiles is characterized by a stock adjustment process. Suppose a special 20 percent sales tax is suddenly imposed on automobiles. Will the share of the tax paid by consumers rise, fall, or stay the same over time? Explain briefly. Repeat for a 50-cents-per-gallon gasoline tax. For products with demand characterized by a stock adjustment process, the short-run demand curve is more elastic than the long-run demand curve because consumers can delay their purchases of these goods in the short run. For example, when price rises, consumers may continue using the older version of the product