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The demand for bags of cement is given by Qd= 3000 - 20P. The marginal cost of producing cement is constant at $40 per bag.

The demand for bags of cement is given by Qd= 3000 - 20P. The marginal cost of producing cement is constant at $40 per bag. However, a tax of $10 per bag exists. A government project requires the purchase of 300 bags of cement.

1. What is the impact of the project on consumer surplus in the market for cement?

2. What is the impact of the project on producer surplus in the market for cement?

3. What is the social opportunity cost of the 150 bags of cement purchased for the project? Explain using a diagram.

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