Question

The government, fearful that a titanium shortage could jeopardize national security, imposes a tax of $2/oz on the retail price of this rare metal. It collects the tax from titanium sellers. The original supply and demand schedules for titanium are as shown in the diagram. Show, in the same diagram, how the short run equilibrium price and quantity of titanium will be affected by the tax. Label all important pointsclearly.


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  • CreatedDecember 12, 2014
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