Suppose that the government imposes a producer tax. That is. the rm pays t units of consumption goods to the government for each unit of output it produces. Determine the effect of this tax on the rm's demand for labour. shift down the revenue function for the rm. The rm chooses the quantity of labour where a downward shift of the labour demand curve, meaning that the rm will hire less labour at a higher real wage. The tax acts to :ts to shift down the revenue function for the firm. The rm ch: + t. e labour deme irate shift down the cost function shift up the cost function shift up the revenue function shift down the revenue function MPN = w+ t. There is a downw wage. MPN = w+ t. (1 - t)MPN = W. MPN = wt. tMPN = W. MPN = W -t. (1 + t)MPN = W.town the revenue function for the firm. The rm chooses re is a downward shift of the labour demand our :l' rea a downward shift of an upward shift of upward movement along downward movement along There is a downward shift of the labou less labour at a higher real wage. more labour at a lower real wage. more labour at any given real wage. more labour at a higher real wage. less labour at any given real wage. less labour at a lower real wage. less labour at a higher real wage