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Even when there arenoexternalities in a market, a government may still tax a good such as petrol to earn revenue. Describe what happens to each
Even when there arenoexternalities in a market, a government may still tax a good such as petrol to earn revenue. Describe what happens to each of the surpluses (including total surplus) in the market for petrol when this occurs,and why.
What elasticity is the market for petrol likely to exhibit? Explain how elasticity influences the impact of the price change on total surplus.(5 Marks)
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