Suppose households supply 500 billion hours of labor per year and have a tax elasticity of supply of 0.16. If the tax rate is increased by 19.6 percent, by how many hours will the supply of labor decline? a) 28.67 billion b) 1.568 trillion c) 2.465 trillion d) 3.422 trillion e) 9.183 trillion
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Suppose households supply 500 billion hours of labor per year and have a tax elasticity of supply of 0.16. If the tax rate is increased by 19.6 percent, by how many hours will the supply of labor decline?
a) 28.67 billion
b) 1.568 trillion
c) 2.465 trillion
d) 3.422 trillion
e) 9.183 trillion
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You used the wrong elacticity of labor supply. It is .16 not 0.1
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