The aggregate supply curve of hours of work used to analyze a payroll tax is generally:
A)elastic.
B)perfectly elastic.
C)inelastic.
D)unit elastic.

Question

Quizplus · Accepted Answer

The aggregate supply curve of hours of work is generally inelastic in the short run because workers are not able to adjust their hours of work immediately in response to changes in payroll taxes. This means that an increase in payroll taxes will result in a relatively small reduction in the total number of hours worked. In the long run, however, the curve may become more elastic as workers have more time to adjust their labor supply and employers have time to adjust their production processes.

The Aggregate Supply Curve of Hours of Work Used to Analyze