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Question
All taxes create some deadweight loss except those on goods
a. with a very low demand.
b. that can be resold for a higher price.
c. that everyone likes to consume.
d. with a perfectly inelastic demand or supply.
e. with a very elastic demand or supply.
Answer
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Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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Q:
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