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Assume that in the analysis about the labor market impact of mandated benefits, C (the cost to the firm for each worker for the mandated benefit) is valued by the worker in the amount of B, where B & C.
a) Compare the resulting equilibrium (w,E) to the one that would occur
i) in a competitive equilibrium without mandated benefits and
ii) in an equilibrium where the government imposes a payroll tax of C on the firm for every employee hour.
b) Provide an empirical example where the assumption B & C is plausible
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