What tax maximizes government revenue

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Reference no: EM13152275

An industry's inverse demand wasPD= 20 - 0.1Qand its inverse supply wasPS= 4 + 0.1Q.

1. Calculate the consumer surplus, producer surplus, government revenue and deadweight loss for taxes of $4, $8, $12 and $16 per unit sold.

2. Graph government revenue and deadweight loss as functions of these tax rates.

3. What tax maximizes government revenue?

Reference no: EM13152275

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