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In: Economics

Consider again the market for a type of equipment used by fans of crafting. As a...

Consider again the market for a type of equipment used by fans of crafting.

As a reminder, before the tax:

Vertical intercept, demand curve: 80
Vertical intercept, supply curve: 50
P* = $60
Q* = 40

And after:

The tax makes the price paid by buyers rise to $70 and the price received by sellers to fall to $55. With the tax, only 20 units are sold.

Calculate consumer surplus BEFORE the tax is applied. Carefully follow all numeric instructions.

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Rahul Sunny answered 2 years ago
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