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Suppose the supply of labor is W - t = 10H, where W is the gross wage, t is the tax (in dollars), and H is labor hours. The demand for labor is W = 120 - 2H.
-With a tax of $12,hours of work become

Question

Quizplus · Accepted Answer

To find the equilibrium hours of work (H), set the supply equation equal to the demand equation: (W - 12) = 10H and W = 120 - 2H. Substitute W from the demand equation into the supply equation: (120 - 2H - 12) = 10H. Simplify to get 108 = 12H, so H = 9.

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