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Unformatted text preview: Tax alcohol and gas to reduce its consumption Obesity taxes??? (Soda) Implication: At some tax rates, reducing taxes will increases tax revenue. Total Surplus: CS + PS + GR (Consumer Surplus, Producer Surplus, Govt Revenue) Taxes cause deadweight loss o Taxes move us from the competitive equilibrium quantity. Taxes cause inefficiencies o Total surplus declines with taxes 15:20 15:20...
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- Spring '07