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Suppose that demand is given by P=120-3Q, and supply is given by P=10+Q.
a. What are the competitive equilibrium price and output
b. If a per unit tax of $10 is imposed, what happens to the price paid by consumers, the price received by suppliers, and the quantity consumed?
c. How much total tax is generated?
d. Who bears the burden of the tax?
e. How much is the deadweight social welfare loss due to the tax?
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(a) Find the instantaneous rate of change of the average cost for any level of production.
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