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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Graphically represent the following:

  1. a. A corrective tax that achieves the socially optimal output
  2. b. A corrective tax that moves the market output farther away from the socially optimal output than was the case before the tax was applied

(a)

To determine

Graphical illustration of a corrective tax that achieves the socially optimal output.

Explanation

Figure 1 shows the corrective tax that achieves the socially optimal output and output that is farther away from the socially optimal output as follows:

In Figure 1, the vertical axis measures the price and cost. The horizontal axis measures the quantity. The upward sloping curves are the market supply curves...

(b)

To determine

Graphical illustration of a corrective tax that moves the market output farther away from the socially optimal output.

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