Q. Assume which the gasoline retailing industry is perfectly competitive, constant-cost also in long-run equilibrium. If the government unexpectedly levies a five-cent tax on every gallon sold by gasoline retailers,

(1) Depict illustrate what will take place to the representative industry's cost curves.

(2) Illustrate what will the effects of the tax be in the short-run on industry o/p also price? Will the price rise by the full five cents in the short-run? How about in the long run?

(3) How would your answer change?

(4) Assume before the tax, the price is $1.00/gallon, Illustrate what is the tax burden on consumers also producers? Illustrate what is the deadweight loss?