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In an economy, the markets for two specific goods are analyzed. Item 1 is requested according to P = 100 - Q at the same
In an economy, the markets for two specific goods are analyzed. Item 1 is requested according to P = 100 - Q at the same time as item 2 is requested according to P = 100 - 2Q. The supply of the goods always costs 40 before the economy introduces a unit tax of 20 for all goods. Explain the consequences this has on the market for being 1 and 2, respectively, comment on welfare effects and the effectiveness of taxation.
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