Rhode Island Has Enacted a Substantial Increase in the Tax

Multiple Choice

Rhode Island has enacted a substantial increase in the tax on employers that finances the workman's compensation system.For some employers, the tax is about $25 per $100 paid in wages.Employers claim they cannot afford to pay the tax.Under which of the following conditions will the actual burden of the tax fall on employers?

A) The employers' demand for labor is perfectly elastic.
B) The supply of labor is perfectly inelastic.
C) The employers' demand for labor is perfectly inelastic.
D) The demand for the good they produce must be perfectly inelastic.