Supply: Q S = 3 P – 2 0
Where Q is Quantity measured in tons, and P is the Price in $ per ton.
The Government decides to levy an In direct Tax (an excise) of $2 per ton on producers.
The competitive model predicts that, as a result of the tax, the equilibrium price will rise by
A. $0.40 per ton
B. $1.20 per ton
C. $1.50 per ton
D. $2.00 per ton
Explain your answer.
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