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Suppose that the government needs to purchase inputs for a project and the market is characterized by an upward sloping supply curve and perfectly inelastic
Suppose that the government needs to purchase inputs for a project and the market is characterized by an upward sloping supply curve and perfectly inelastic demand curve. If the government is buying Q units in this market, will government expenditures overstate, understate, or equal social costs? (Please use a graph to illustrate.)
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