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The Government Wants to Transfer Welfare from Buyers to Sellers

Question 101

Multiple Choice

The government wants to transfer welfare from buyers to sellers by collecting a $1 tax on a good from buyers and subsidizing sellers $1 for each unit of the good sold. This policy will:


A) decrease the equilibrium price.
B) increase the equilibrium price.
C) decrease the equilibrium quantity.
D) increase the equilibrium quantity.

Correct Answer:

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