refer to the following diagram
-Assuming that labor supply is S₁,imposing an income tax on this market will:

Question

refer to the following diagram -Assuming that labor supply is S₁,imposing an income tax on this market will:

Quizplus · Accepted Answer

An income tax on this market would reduce the net (after-tax) wage rate for workers, which would lower their incentive to supply labor in the market. This would shift the labor supply curve to the left from S₁ to SS1U2B11S1U2B0. As a result, the market wage rate would rise due to the reduction in the quantity of labor supplied, but the net (after-tax) wage rate would fall for workers due to the imposed tax. Therefore, the correct answer is A.

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