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Macro HW #4.docx - Mia Hernandez SS 141 3/14/21 HW #4 There...

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Unformatted text preview: Mia Hernandez SS 141 3/14/21 HW #4 There is a claim that ticket scalping increases the general well-being of concertgoers and sports enthusiasts. Scalpers function to allocate tickets to those who need them the most, or, as economists might put it, to maximize the market's allocative efficiency. This allocative productivity is essentially increased by online ticket purchasing and selling sites. These websites provide buyers and sellers with ever-increasing amounts of detail, reducing the time and costs involved with the purchasing of each resold ticket. I believe that there shouldn’t be any laws against reselling tickets as it is customary nowadays, Generation Z resells many products for much more than their face value. Since the scale of the labor tax is easy to calculate, the deadweight loss of this tax is more difficult. Economists differ about whether this 50% labor tax results in a minor or substantial deadweight reduction. This controversy emerges as a result of economists' differing perspectives on the elasticity of labor supply. Labor supply is generally inelastic, according to economists who conclude that labor taxes do not substantially distort business results. Most workers, they say, will work full-time regardless of pay; if this is valid, the labor supply curve is virtually vertical, and a labor tax has a slight deadweight loss. Those who argue that labor taxes are particularly distorting assume that labor supply is more elastic. They agree that certain groups of workers can have labor inelasticity, but they also say that many other groups respond to incentives. ...
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