Suppose demand and supply are exactly as described in problem 3, but there is no marginal social benefit to production. However, for political reasons the government counts a dollar’s worth of gain to...


Suppose demand and supply are exactly as described in problem 3, but there is no marginal social benefit to production. However, for political reasons the government counts a dollar’s worth of gain to producers as being worth $3 of either consumer gain or government revenue. Calculate the effects on the government’s objective of a tariff of 5 per unit.



May 03, 2022
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