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Consider two parallel universes: Thisuni and Nisuthi. Suppose the market's labour demand and supply curves in Thisuni are expressed as: W = 16 - LD and W = 1 + 2LS. The market's labour demand and supply curves in Nisuthi are expressed as: W = 16 - LD and W = 4 + 0.5LS, where W is the wage rate per day per worker, LD is the number of workers demanded and LS is the number of workers supplied. Later, the government in each universe imposes a $9/day/worker payroll tax on the firms in the industry.
a. Show in a diagram, the wage rates and employment levels before and after the payroll tax in Thisuni.b. Show in a diagram, the wage rates and employment levels before and after the payroll tax in Nisuthi.c. If you were to emmigrate from earth, would you rather land and work in Thisuni or Nisuthi? Elucidate your reason based on the burden of tax paid by workers and firms.
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