Assume the government decides to impose a per-unit tax on a good produced in a perfectly competitive market.
a.Graphically illustrate the short-run effects of the tax on the cost conditions faced by a representative firm in the market.
b.Explain the adjustment process to long-run equilibrium in the market.What has happened to long-run equilibrium price and output as a result of the tax? What has happened to the number of firms in the market? Why?

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The Answer of Assume the government decides to impose a per-unit tax on a good produced in a perfectly competitive market.
a.Graphically illustrate the short-run effects of the tax on the cost conditions faced by a representative firm in the market.
b.Explain the adjustment process to long-run equilibrium in the market.What has happened to long-run equilibrium price and output as a result of the tax? What has happened to the number of firms in the market? Why?

Assume the Government Decides to Impose a Per-Unit Tax on a Good