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Suppose demand and supply are given by:
Qdx = 14 - 0.5 Px and Qsx = .25 Px - 1
a) Determine the equilibrium price and quantitiy.
b) Suppose a $12 excise tax is imposed on the good. Determine the new equilibrium price and quantity.
c) How much tax revenue does the government earn with the $12 tax?
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