The market labor supply curve is nearly vertical

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Assume a city has so few employers that the market labor supply curve is nearly vertical. The government introduces a new payroll tax. Explain in words and graphically why workers will end up paying most of the tax, directly or indirectly. Now assume several other employers enter the town, and companies now compete much more for workers. Explain why workers now will pay less of the tax.

Reference no: EM131242445

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