Determining the public economics

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Public Economics

Suppose RDU imposes a new airport tax, which is to be paid by travelers. Assume airlines' demand for labor is relatively inelastic but not perfectly inelastic; workers' supply of labor is very elastic but not perfectly elastic, either.

i. The demand will SHIFT UP / SHIFT DOWN / NOT CHANGE (circle one) after the tax.

ii. The supply will SHIFT UP / SHIFT DOWN / NOT CHANGE (circle one) after the tax. 

iii. Economic incidence of the tax falls onto AIRLINES / WORKERS / BOTH SIDES (circle one).

iv. AIRLINES / WORKERS (circle one) will bear a larger share of the economic incidence.

Reference no: EM132504845

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