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Using a Regular Labor Supply Curve Instead of a Compensated

Question 26

Multiple Choice

Using a regular labor supply curve instead of a compensated supply curve to calculate the excess burden of a tax on labor income will:


A) result in an accurate estimate of the excess burden.
B) overestimate the excess burden.
C) underestimate the excess burden.
D) accurately estimate the excess burden only if the market supply of labor is perfectly inelastic.

Correct Answer:

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