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Suppose the government is trying to encourage the consumer purchase of thrifted clothing as part of a recycling initiative. To try and achieve this, it
Suppose the government is trying to encourage the consumer purchase of thrifted clothing as part of a recycling initiative. To try and achieve this, it imposes a tax of $15 on sellers of new clothing. For a market with the following supply and demand schedule, draw a graph and illustrate the effects of this tax. How is the burden of tax divided? Do buyers or sellers carry a larger burden of the tax? What is the burden on buyers? What is the burden on sellers? What is the new equilibrium price and quantity?
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