Introductory Microeconomics Essay

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‘Using the concepts of consumer surplus, producer surplus and deadweight loss, with the aid of a diagram consider the impact of a unit tax levied on producers in a competitive market. With the aid of a separate diagram, compare two goods with inelastic and elastic demand curves respectively and the same supply curve (with both demand curves intersecting this supply curve at the same initial price and quantity) and explain which type of good yields the greatest tax revenue to the government at the lowest net loss in consumer surplus, producer surplus and deadweight loss’.

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