-The figure above shows the labour supply and labour demand curves for personal trainers in Victoria. The initial equilibrium hourly wage is $10. The government of Victoria institutes an additional income tax on the income of personal trainers of $6 an hour in order to fund school sports programs. How much of the tax is paid by employees?

Question

Quizplus · Accepted Answer

The tax burden is shared between employers and employees depending on the elasticity of demand and supply. If the equilibrium wage decreases by $2, it means employees bear $2 of the tax.

-The Figure Above Shows the Labour Supply and Labour Demand