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Taxes and Elasticity 5. Start over again. Everything is exactly the same as it was at the start of question 1. There is no price
Taxes and Elasticity 5. Start over again. Everything is exactly the same as it was at the start of question 1. There is no price control. Instead, the government now levies a tax on the sellers (the sellers are responsible for sending the tax to the government) of X equal to $16 per unit of X sold. a. If there is trade in this market with the government tax on X, what will be the equilibrium price paid by the buyers? (note: any amount of the tax paid by the buyers is included in the price). b. Compare the equilibrium price in question a with the equilibrium price without the tax in question 1. How much did the price increase as a result of the $16 per unit tax on X
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