Examlex
The demand curve and supply curve for a good are given by QD = 100 - 5P and QS = 1.25P - 2.5. Suppose the production of this good creates a negative externality, where the external marginal cost is constant at $2. Assuming the government implements the appropriate per-unit tax to achieve the socially optimal outcome, buyers pay a price of $_____.
Tax Increase
A rise in the amount of money that taxpayers must pay to the government, typically presented as a percentage of income or value of goods and services.
Seller
An individual or entity that offers goods or services in exchange for payment or other compensation.
Buyer
An individual or organization that purchases goods or services from another entity.
Tax
Mandatory financial charges imposed by a government on individuals, corporations, or other entities to fund public expenditures and services.
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