If the Labour Market Is Perfectly Competitive, Labour Demand Function

Multiple Choice

If the labour market is perfectly competitive, labour demand function is given by ND = a + bW and labour supply function is given by NS = c + dW; W is the wage rate. After imposing a payroll tax T, market equilibrium wage rate will be:

A) higher than before the tax, and the firm pays b/(b - d) share of the tax.
B) lower than before the tax, and workers pay b/(b - d) share of the tax.
C) higher than before the tax, and workers pay b/(b - d) share of the tax.
D) lower than before the tax, and the firm pays b/(b - d) share of the tax.
E) equal to before the tax.