In problem, suppose the city imposes a sales tax of $6 per widget. a. In the short
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a. In the short run, what is the new price of a widget?
b. In the long run, what is the new price of a widget?
c. In the long run, how many firms leave theindustry?
Transcribed Image Text:
IndustryWide Demand Price Firm's Marginal Cost Curve Quantity Marginal Cost $2 Quantity 500 400 300 200 100 $2 4 12 12 25 10 15 15
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a Original equilibrium is at quantity 300 New equilibrium must be at ...View the full answer
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