5 A Suppose The Government Imposes A Producer Tax The Firm Pays T Units Of Consumpti 3345295

5. a) Suppose the government imposes a producer tax: the firm pays t units of consumption goods to the government for each unit of output it produces. Determine the effect of this tax on the firm’s demand for labour. b) Repeat (a) in the case of an employment subsidy, where the government pays the firm s units of consumption goods for each unit of labour that the firm hires.

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