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Suppose the government imposes an excise tax on the production of a good produced in a perfectly competitive market that was in long run equilibrium.
Suppose the government imposes an excise tax on the production of a good produced in a perfectly competitive market that was in long run equilibrium.Draw side by side market and firm graphs showing the short run impact on the firm and the market.Describe how the market adjusts to bring about a new long run equilibrium.Compare original and new market price, the size of the industry before and after the tax, and the amount produced by the industry before and after the tax.
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