Question: Setting a price ceiling for a good (below the normal market price) results in an excess burden. Demonstrate this, by using supply and demand curves.

Setting a price ceiling for a good (below the normal market price) results in an excess burden. Demonstrate this, by using supply and demand curves. In addition, show how the imposition of a tax on a substitute good, by affecting the demand for the good with a price ceiling, increases the excess burden (Hines, 1999: 180).

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