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Suppose the government is thinking about levying a per-unit tax of $20 on firms supplying either sweatpants or glasses. The supply curves for both of
Suppose the government is thinking about levying a per-unit tax of $20 on firms supplying either sweatpants or glasses. The supply curves for both of the two goods are identical, as given by the following graphs. The demand for sweatpants is given by DS (on the first graph), and the demand for glasses is given by DG (on the second graph). Suppose the government decides to tax sweatpants. The following graph plots the yearly demand and supply for this good. It also plots another supply curve (S Tax ) shifted upward by the proposed tax amount ($20 per pair)
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