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Suppose the Supply of Tobacco Is Elastic and the Demand

Question 200

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Suppose the supply of tobacco is elastic and the demand for tobacco is inelastic. If an excise tax is levied on the suppliers of tobacco, will the incidence fall mostly on consumers or mostly on producers? Will there be a large amount or small amount of deadweight loss? Will tax revenue from the tobacco tax fall or rise?

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Because consumers are the group less res...

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