5.3 The initial equilibrium is e, where the linear supply curve intersects the linear demand curve. Show
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5.3 The initial equilibrium is
e, where the linear supply curve intersects the linear demand curve. Show the welfare effects of imposing a specific tax . Now suppose the demand curve becomes flatter, but still goes through point
e, so that it is more elastic at e than originally. Discuss how the tax affects the equilibrium, CS, PS, welfare, and DWL differently than with the original demand curve.
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Kirti Kaushal
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