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Consider the graph below. The labor demand curves D and D' show the maximum amount that firms are willing to pay to hire any given number of workers. D shows the original demand for labor. After a payroll tax is introduced by the government, the curve shifts to D'. In this situation, which of the following is true?

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Consider the graph below. The labor demand curves D and D' show the maximum amount that firms are willing to pay to hire any given number of workers. D shows the original demand for labor. After a payroll tax is introduced by the government, the curve shifts to D'. In this situation, which of the following is true?<br><img src='https://www.fatskills.com/images2/GradExams/714B7420-152F-46A8-96AF-70A8A1AE7415.png' height='413' width='474'/>





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