When the supply curve of labor is perfectly inelastic and a social security tax is collected partly from employers and partly from employees,the burden of the tax is:
A)entirely borne by the employees.
B)entirely borne by the employers.
C)borne by both the employers and the employees.
D)borne by the employers only if labor demand is elastic.

Question

Quizplus · Accepted Answer

When the supply curve of labor is perfectly inelastic, workers are willing to work the same amount regardless of the wage rate. Therefore, regardless of how the tax is officially divided, the economic burden of the tax falls entirely on the employees because their supply of labor does not change in response to the tax.

When the Supply Curve of Labor Is Perfectly Inelastic and a Social