•If the government decides to impose a tax of 20 cents per litre on petrol, draw...

•If the government decides to impose a tax of 20 cents per litre on petrol, draw a graph the impact of the tax on market equilibrium price, and discuss whether the outcome is efficient by demonstrating the change of consumer’s and producer’s surplus as a result of the tax.

•Draw a demand and supply model, with demand curve.

•Show the shift of S as a result of 20 cent tax.

•Identify new equilibrium.

•Mark the price paid by consumer and received by the seller.

Demonstrate change of consumer and producer’s surplus, tax revenue, and deadweight loss.

Expert Solution

Rahul Sunny answered 2 years ago

If the government decides to impose a tax of 20 cents per litre on petrol, illustrate...

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