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ECON236 Advanced Microeconomics

tag 1 Download 6 Pages / 1,412 Words tag 08-07-2021

Question:

Assume the government decides to impose a per-unit tax on a good produced in a perfectly competitive market to help finance the increased government expenditure.
Appraise and graphically illustrate the short-run effects of the tax on the cost conditions faced by a representative firm in the market. Explain the adjustment process to long-run equilibrium in the market. What has happened to long-run equilibrium price and output as a result of the tax? What has happened to the number of firms in the market? Why?
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