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8 [5 points] Suppose we have a perfectly competitive market with no externalities. The government is choosing between imposing a price ceiling and a per-unit
8 [5 points] Suppose we have a perfectly competitive market with no externalities. The government is choosing between imposing a price ceiling and a per-unit tax, both of which result in the same market quantity after the intervention. Which one has the lowest deadweight loss? Explain your reasoning. Solution: A price ceiling has additional sources of DWL so the tax has a lower DWL
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