Suppose There Are 50 Sellers in a Market, and They

question 64

Essay

Suppose there are 50 sellers in a market, and they each have one unit of a good to sell. There are 50 buyers in this market and the market clears with all of the good traded. Now, government imposes a sales tax on the good. The government levies a $3 tax on the buyers of the good. What is the maximum possible amount of revenue that the government may collect from the tax? Under what conditions will this occur?

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Definitions:

Market Economies

Economic systems in which decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.

Multilateral Aid

Financial assistance provided by multiple governments or organizations to support economic development and welfare in developing countries.

Government Aid

Financial assistance or resources provided by the government to individuals, organizations, or other countries, often for relief, development, or economic support.

Political Self-Interests

Actions or policies pursued by politicians or political parties based on their own advantages or benefits rather than on public welfare.