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Effects of Taxes on a Market
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Problem 10
Effects of Taxes on a Market
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6. Introduction to Taxes and Subsidies / Effects of Taxes on a Market / Problem 9
Problem 9
What happens to a market when a tax is imposed, and how does it affect economic surplus?
A
The market reaches a new equilibrium with increased economic surplus.
B
The market moves away from equilibrium, reducing economic surplus due to deadweight loss.
C
The market remains at equilibrium, but economic surplus is unaffected.
D
The market moves to a higher equilibrium, increasing consumer surplus.
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