Suppose the market for purses can be described where P is price per bag and quantity is measured as hundreds of bags per day.   The government decides to levy a $2 tax on each bag of almonds to be taken at the register to capitalize on the recent increase in almond consumption.   How much deadweight loss would exist in the market ?

Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter3: Market Demand And Supply
Section3.A: Consumer Surplus, Proudcer Suplus, And Market Efficency
Problem 20SQ
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Suppose the market for purses can be described where P is price per bag and quantity is measured as hundreds of bags per day.

 

The government decides to levy a $2 tax on each bag of almonds to be taken at the register to capitalize on the recent increase in almond consumption.

 

How much deadweight loss would exist in the market ?

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