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In the town of Rochester, widgets are sold by a competitive industry at an equilibrium price of $12 apiece. One day the city simultaneously imposes a price ceiling of $7 per widget and a sales tax of $5 per widget. Use a graph to illustrate the amount that consumers must pay, in price plus tax plus the value of waiting time, to acquire a widget. Use your graph to illustrate the total value of time spent waiting for widgets. Use your graph to illustrate the gains and losses to all relevant groups, and to show the deadweight loss.
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