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This is an individual assignment. The objective of this Assignment is to understand the concept of Demand and Supply and elasticity. Students are required to submit a report on the assignment question given below.
Assignment Question
Suppose that the government decided to impose tax on petrol. What would happens to the demand for the petrol as well as the demand for the other goods due this effect? Who would suffer more due to this tax?
Where relevant, use charts, diagrams, and data etc.
• Using supply and demand diagrams illustrate what happened to equilibrium relative price and quantities of these items. Relate this to Adam Smith’s notion of the invisible hand.
• Illustrate the consumer and producer surplus before and after the tax.
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