Why the government imposes a tax on domestic producers

Reference no: EM13201480

Assume that the world price of Good A is $8 per unit while its domestic price is $6, and the marginal cost incurred by domestic producers for producing one unit of Good A is $5. If the government imposes a tax of $3 per unit on domestic producers, which of the following situations will be observed?

Reference no: EM13201480

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