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Suppose the government imposes a $10 per unit tax on a good. A graph of price, P, versus quantity, Q, shows a supply curve, S,
Suppose the government imposes a $10 per unit tax on a good. A graph of price, P, versus quantity, Q, shows a supply curve, S, rising linearly from point (0, 4) to (42, 18), and a demand curve, D, descending linearly from point (0, 24) to (42, 4). The curves intersect at (24, 12). 3 points are indicated on the graph. 2 on the demand curve, at (12, 18) and at (33,8), and 1 on the supply curve at (12, 8). Areas A, B, C, D, F, G, H, J, K, L, and M are shown on the graph. All area lie below the Demand curve. Area A, between P = 24 and P = 18. Area B, before Q = 12 and between P = 18 and P = 12. Area C, after Q = 12 and between P = 18 and P =12. Area D, before Q = 12 and between P = 12 and P = 8. Area F, above the Supply Curve, after Q = 12, and between P = 12 and P = 8. Area G, below the Supply curve, after Q = 12, and between P = 12 and P = 8. Area H
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