Economists disagree on whether labor taxes cause small or large deadweight losses.This disagreement arises primarily because economists hold different views about
A)the size of labor taxes.
B)the importance of labor taxes imposed by the federal government relative to the importance of labor taxes imposed by the various states.
C)the elasticity of labor supply.
D)the elasticity of labor demand.

Question

Quizplus · Accepted Answer

The disagreement is mainly due to differing views on the elasticity of labor supply, which affects how much labor supply responds to changes in labor taxes, thus influencing the size of deadweight losses.

Economists Disagree on Whether Labor Taxes Cause Small or Large