The following graph shows the labor market for research assistants in the fictional country of Universalia. The equilibrium wage is $10 per hour, and the equilibrium number of research assistants is 200.
Suppose the government has decided to institute a $2-per-hour payroll tax on research assistants and is trying to determine whether the tax should be levied on the employer, the workers, or both (such that each pays half the tax).
Use the graph input tool to evaluate these three proposals. Entering a number into the Tax Paid by Employers field (initially set at zero dollars per hour) shifts the demand curve down by the amount you enter, and entering a number into the Tax Paid by Workers field (initially set at zero dollars per hour) shifts the supply curve up by the amount you enter. You will not be graded on any changes you make to this graph.
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