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Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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
Transcribed Image Text:EC 252 Midterm 2 SA Practice
2. Use the following graph to answer questions A-C:
Supply and Demand for Lumber
55
50
45
40
35
30
25
20
15
10
5
35
45
40
50
40
45
55
45
50
60
70
50
55
65
60
70
75
55
65
75
80
70
80
Supply
75
85
Demand 2 Demand 1
0
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
95
A) Suppose Demand 1 is the market demand curve. Further, suppose Demand 2 represents the market demand curve
when there is a tax imposed on consumers. What is the per unit amount of the tax? What is the share of the burden of
the tax?
B) What is the total revenue collected by the tax? Will there be a dead weight loss as a result of the tax? If so, how
large is it?
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