What goods should the government put the very small tax

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The government of Granita is thinking about imposing a very small tax on one or more of the following goods: anvils, books, and cardigans. Anvils and books are both produced in competitive markets with constant marginal costs, while cardigans are produced by a monopoly with constant marginal costs. The elasticities of demand for the three goods are -3, -1.5, and -1.

What good or goods should the government put the very small tax on if it wants to minimize the deadweight burden?

Reference no: EM131200247

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