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Sachin Has Been in the Habit of Mowing His Sister

Question 130

Essay

Sachin has been in the habit of mowing his sister, Darien's, lawn each week. She gives him for $20. Sachin's opportunity cost is $18, and Darien would be willing to pay $25 to have her lawn mown. What is the maximum tax the government can impose on lawn mowing without discouraging Sachin and Darien from continuing their mutually beneficial arrangement?

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If the tax is less than $7, there will b...

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