Related to the Economics in Practice on p. 105: Researchers found that after a few years of a tax relief policy for foreigners, the fraction of foreigners in the top 0.5 percent of income earners in Denmark almost doubled. The researchers concluded that for this group of workers, labor supply seems to be
A) elastic.
B) inelastic.
C) unit elastic.
D) perfectly inelastic

Question

Quizplus · Accepted Answer

The increase in the fraction of foreigners in the top 0.5 percent of income earners in Denmark after the implementation of a tax relief policy indicates that these workers were responsive to changes in taxation, suggesting that their labor supply is elastic. Elastic labor supply means that the quantity of labor supplied changes significantly in response to changes in wages or tax policies.

Related to the Economics in Practice on P