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Suppose the government imposes a production tax on one perfectly competitive firm in an industry that is in perfect competition and has 100s of firms
Suppose the government imposes a production tax on one perfectly competitive firm in an industry that is in perfect competition and has 100s of firms in it. For each unit the taxed firm produces, it must pay $2 to the government. Will consumers in this market end up paying higher prices because of the tax? Why or why not? Post your answer.
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