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There are two identical firms (a and b). They produce the same good. Until now, they only differ in the state they are in. Firm
There are two identical firms (a and b). They produce the same good. Until now, they only differ in the state they are in. Firm a is in state A and firm b is in state B. Both states need new revenue, so they will impose some new taxes. State A will tax capital. State B will tax the firms' final products. Using the Marshal rules of derived demand explain how each state's new taxes will affect each firm's demand for labor. (Concise answers preferred)
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