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Unformatted text preview: Suppose the government institutes a $20 per unit tax on consumers. The new, after tax demand curve is Qd = 710 - 2P. i) What is the deadweight loss due to the tax? ii) What are the consumer and producer burdens of the tax? iii) Which is more inelastic demand or supply? g) Forget about the tax and return to the original equilibrium. Suppose the government imposes a price floor of $180 in the market. i) What is producer surplus both before and after the price floor is imposed? ii) Which is larger the change in producer surplus or the deadweight loss?...
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- Fall '12