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PFA the image below.

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As there are n firms in the market, and a tax of t moves up the cost curves of an individual firm by t units, shouldn't the cost curve of the market move up by n*t units? If yes, why does the book move the curves up only by t units. If no, could you please explain where my reasoning is going wrong?

Thanks

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2 Answers 2

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The important thing to note is that the unit on the vertical axis is dollars per unit.

So if there is a tax of $\$t$ per unit, then the market supply curve will move up by $ \$ t$. (And not by $ \$nt $ as you have suggested.)

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Agree with the answer by Kenny, I'd just also add that if you take a look at the horizontal axis, the curve shifts left by $n(q_1 - q_2)$ units, while the firm's quantity decreases by $q_1 - q_2$. So, in the quantity dimension, you do get that expected factor of $n$ when you look at the horizontal difference in the market vs. the firm.

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