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Suppose the government imposes a 1 tax on every unit of a


1. Suppose the government imposes a $1 tax on every unit of a good sold. How will the tax affect a firm's short-run cost curves? Its short-run output?

2. Suppose interest rates fall, how will managers' incentives be affected and how will the firm's cost structure be affected?

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Microeconomics: Suppose the government imposes a 1 tax on every unit of a
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