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Scenario: The Market for Good X:
The market for good X can be depicted with the following demand and supply equations:
Demand: P = 50 - 0.5Q
Supply: P = 0.33Q
where P is price per unit and Q represents quantity in units. Policy makers plan on imposing a $1 per unit tax on this good.
-(Scenario: The Market for Good X) Look at the scenario The Market for Good X. If a $1 per unit tax is imposed on this good, the new supply curve will be:

Question

Quizplus · Accepted Answer

The $1 per unit tax shifts the supply curve vertically upwards by $1, resulting in the new supply equation: P = 0.33Q + 1.

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