The demand and supply in a perfectly competitive market are QD = 60 - p and QS = 2p , respectively. The government wants to impose an excise tax $t per unit in order to collect at least $450 of tax revenues. What is the minimum amount of inefficiency (DWL) implied by such a tax?

The demand and supply in a perfectly competitive market are QD = 60 - p and QS = 2p , respectively. The government wants to impose an excise tax $t per unit in order to collect at least $450 of tax revenues. What is the minimum amount of inefficiency (DWL) implied by such a tax?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter6: Elasticities

Section: Chapter Questions

Problem 20P

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Definition Definition Structure of the market that exists when many buyers and sellers exchange similar commodities and prices are fixed by market forces, demand, and supply. When there is perfect competition, a single business cannot impact the price or market value of the homogenous product.

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