Questions: If the labor supply curve is very elastic, a tax on labor a. has a large deadweight loss. b. has a relatively small impact on the number of hours that workers choose to work. c. results in a large tax burden on the firms that hire labor. d. raises enough tax revenue to offset the loss in welfare.

The answer is the first one (A): has a large deadweight loss.

Explanation for each option:

a. Has a large deadweight loss.

• Correct. When the labor supply curve is very elastic, it means that workers are highly responsive to changes in wages. A tax on labor would cause a significant reduction in the quantity of labor supplied, leading to a large deadweight loss because the market is not operating at its most efficient point.

b. Has a relatively small impact on the number of hours that workers choose to work.

• Incorrect. An elastic labor supply curve indicates that workers are sensitive to changes in wages, so a tax would likely have a significant impact on the number of hours worked.

c. Results in a large tax burden on the firms that hire labor.

• Incorrect. While the tax burden can be shared between workers and firms, the elasticity of the labor supply curve primarily affects how much the quantity of labor supplied changes, not directly who bears the tax burden.

d. Raises enough tax revenue to offset the loss in welfare.

• Incorrect. While taxes do generate revenue, the presence of a large deadweight loss suggests that the welfare loss exceeds the revenue generated, especially when the supply is very elastic.

In summary, when the labor supply curve is very elastic, a tax on labor leads to a large deadweight loss due to the significant reduction in labor supplied.