Essay
Suppose the demand for cigarettes is Q=15- 0.5P and the supply of cigarettes is Q = P - 3, where P is the price per pack of cigarettes. Suppose the government imposes a cigarette tax of $3 per pack.
a)What is the price paid by producers?
b)What is the price faced by consumers?
c)What is the government revenue from the tax?
d)What is the total dollar amount of tax revenue that is ultimately paid by consumers (i.e. consumers. tax burden)?
Correct Answer:
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a)P=11; b)...View Answer
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Correct Answer:
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