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Question
When a tax is imposed on some good, the lost consumer surplus and producer surplus both typically end up as
a. additional revenues for firms.
b. lower prices for consumers.
c. more units of output bought and sold.
d. increased social welfare.
e. tax revenue and deadweight loss.
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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