Draw a figure to illustrate the answer given in Solved Problem 5.4. Use math and a figure

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Draw a figure to illustrate the answer given in Solved Problem 5.4. Use math and a figure to show how adding an ad valorem tax changes the analysis.

Solved Problem 5.4:-

Next to its plant, a manufacturer of dinner plates has an outlet store that sells plates of both first quality (perfect plates) and second quality (plates with slight blemishes). The outlet store sells a relatively large share of seconds. At its regular stores elsewhere, the firm sells many more first-quality plates than second-quality plates. Why? (Assume that consumers' tastes with respect to plates are the same everywhere and the cost of shipping each plate from the factory to the firm's other stores is \(s\).)

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Microeconomics

ISBN: 9781292215624

8th Global Edition

Authors: Jeffrey Perloff

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