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The demand for a good is given by Q= 99-3P and the supply by Q= 2P+4. The market for this good is in equilibrium. Now,
The demand for a good is given by Q= 99-3P and the supply by Q= 2P+4. The market for this good is in equilibrium. Now, the government introduces a tax of $5 per unit to be paid by the producers. How large is the consumer surplus, producer surplus, and total welfare generated by this market after the introduction of the tax? Show your calculations. Sketch the market diagram and label all relevant prices and quantities.
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