Asked by Ariah Scales on Jul 07, 2024
Verified
Related to the Economics in Practice on p. 105: Researchers found that after a few years of a tax relief policy for foreigners, the fraction of foreigners in the top 0.5 percent of income earners in Denmark almost doubled. The researchers concluded that for this group of workers, labor supply seems to be
A) elastic.
B) inelastic.
C) unit elastic.
D) perfectly inelastic
Labor Supply
The total hours that workers are willing and able to work at a given wage rate, in a given time period.
Elastic
In economics, elastic refers to how the quantity demanded or supplied of a good responds to changes in its price; high elasticity indicates sensitivity to price changes.
- Understand the concept of labor supply elasticity and its implications for labor markets.
Verified Answer
DL
Daily LifewithmandaaJul 08, 2024
Final Answer :
A
Explanation :
The increase in the fraction of foreigners in the top 0.5 percent of income earners in Denmark after the implementation of a tax relief policy indicates that these workers were responsive to changes in taxation, suggesting that their labor supply is elastic. Elastic labor supply means that the quantity of labor supplied changes significantly in response to changes in wages or tax policies.
Learning Objectives
- Understand the concept of labor supply elasticity and its implications for labor markets.
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