Downward sloping demand and upward sloping supply

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Assume the equilibrium price of gasoline is currently $2 per liter. An excise tax of $0.50 per liter of gasoline is placed on the suppliers in a market with downward sloping demand and upward sloping supply.

Your friend tells you the new price of gasoline will be $2.50 per liter. What is your response?

Reference no: EM132524353

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