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Suppose the labour market of a particular economy is described by the labour demand and labour supply equations as follows: Labour Demand Ld = 125 − 5w (alternatively this labour demand equation can be written as wd=25-0

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Suppose the labour market of a particular economy is described by the labour demand and labour supply equations as follows: Labour Demand Ld = 125 − 5w (alternatively this labour demand equation can be written as wd=25-0.2L); Labour Supply Ls = 20 +10w (alternatively this labour supply equation can be written as ws =-2+0.1L). In these equations L is the number of workers and w is the hourly wage (dollars per hour)

Equilibrium is, wage = $7, workers employed = 90

Part A) Stay with the labour demand and supply equations from Q1. Assume that there is no minimum wage in place and the labour market is in equilibrium. The government decides to levy a payroll tax on firms, requiring firms to pay $3 of tax per labour hour. Calculate the level of equilibrium employment after the payroll tax is put in place. Round your answer to the nearest integer.

Part B) Stay with the scenario in Q5. What fraction of the payroll taxes paid by firms is passed onto workers? Round your answer to the nearest hundredth decimal place (e.g. supply answers which look like 0.55, 0.23, etc.).