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1. Calculate the CS, PS, the externality cost, and overall surplus in the absence of the tax. Then calculate these again under the tax, taking into account the tax revenue raised. Calculating the various triangles, we get the results as outlines in the table below. When calculating the external costs, it is easiest to simply subtract the area under the supply curve from the area under the SMC curve.)

2. What is the DWL from not having the Piguvian tax?

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Answer #1

Consumes Susplus -/2 e t IL0889 ot Sve 15 2. 125oOO 2 ま250000 30$20-750 10 both youe ave given ay-

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