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Commerce · Q423

Economics

Graduate and Post Graduate · Commerce · question 423

Q423

If in a purely competitive market with downward-sloping demand and upward sloping supply curves, a specific excise tax per unit of output is imposed, then

A.
price rises by the amount of the tax
B.
the price-rise is less than the amount of the tax
Answer
C.
the price-rise is greater than the amount of the tax
D.
the price remains the same

Answer: Option B

Solution

Answer: Option B
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