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Question: Assume the supply of plain white tee shirts is perfectly elastic, but demand has the usual downward sloping shape. Suppose the government imposes a tax per unit sold on plain white tee shirts. Compared to the market without tax, what will happen to the price (paid by the buyers) and the quantity sold when the tax is imposed? Illustrate using the appropriate supply & demand graph. (More space on the back for your answer.)

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M93128384

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