Question
In: Economics
A country which does not tax cigarettes is considering the introduction of a $0.40 per pack...
A country which does not tax cigarettes is considering the
introduction of a $0.40 per pack tax. The
economic advisors to the country estimate the supply and demand
curves for cigarettes as:
QD = 140,000 - 25,000P QS = 20,000 + 75,000P,
where Q = daily sales in packs of cigarettes, and P = price per
pack. The country has hired you to provide
the following information regarding the cigarette market and the
proposed tax.
a. What are the equilibrium values in the current environment with
no tax?
b. What price and quantity would prevail after the imposition of
the tax? How much do buyers now pay?
How much do produces receive?
c. How much revenue is raised by the tax?
d. Calculate the deadweight loss from the tax.
e. Based on your answer in (b), is supply or demand more elastic?
Explain.
Solutions
Rahul Sunny answered 7 months agoRelated Solutions
A country which does not tax cigarettes is considering the introduction of a $0.40 per pack...
A country which does not tax cigarettes is considering the
introduction of a $0.40 per pack tax. The economic advisors to the
country estimate the supply and demand curves for cigarettes
as:
QD = 140,000 - 25,000P QS = 20,000 + 75,000P,
and The country has hired you to
where
provide the following information regarding the cigarette market
and the proposed tax.
What are the equilibrium values in the current environment with
no tax?
What price and quantity would prevail...
A country which does not tax cigarettes is considering the introduction of a $0.40 per pack...
A country which does not tax cigarettes is considering the
introduction of a $0.40 per pack tax. The economic advisors to the
country estimate the supply and demand curves for cigarettes
as:
QD = 140,000 -
25,000P QS =
20,000 + 75,000P,
where Q = daily sales in packs of cigarettes, and P = price per
pack. The country has hired you to provide the following
information regarding the cigarette market and the proposed
tax.
What are the equilibrium values...
A country which does not tax cigarettes is considering the introduction of a $0.40 per pack...
A country which does not tax cigarettes is considering the
introduction of a $0.40 per pack tax. The economic advisors to the
country estimate the supply and demand curves for cigarettes
as:
QD = 140,000
-25,000P Qs = 20,000 +
75,000P
Where Q = daily sales in packs of
cigarettes, and P = price per pack.
The country has hired you to provide
the following information regarding the cigarette market and the
proposed tax.
What are the equilibrium values in...
A country which does not tax cigarettes is considering the introduction of a $0.40 per pack...
A country which does not tax cigarettes is considering the
introduction of a $0.40 per pack tax. The economic advisors to the
country estimate the supply and demand curves for cigarettes as: QD
= 140,000 - 25,000P QS = 20,000 + 75,000P, where Q = daily sales in
packs of cigarettes, and P = price per pack. The country has hired
you to provide the following information regarding the cigarette
market and the proposed tax. a. What are the equilibrium...
1. A country that does not tax gasoline is considering the introduction of a tax ($3.00...
1. A country that does not tax gasoline is considering the
introduction of a tax ($3.00 per gallon). The economic advisors to
the country estimate the supply and demand curves for gasoline
as:
Demand: P = 18-2.5Qd
Supply: P = 0.5Qs
where Qd is the quantity demanded, Qs is the quantity supplied, and
P is the price per gallon. Assume the country does not trade
gasoline with other countries. Suppose the country’s health advisor
found that gasoline consumption generates negative...
If the government announces today that a tax increase of 80 cents per pack of cigarettes...
If the government announces today that a tax increase
of 80 cents per pack of cigarettes is to take place in two weeks,
what would you expect to happen today to the current market for
cigarettes?
At the current price of 2.00/pack, 5,000 cartons of cigarettes are demanded per day in Trentville,...
At the current price of 2.00/pack, 5,000 cartons of cigarettes
are demanded per day in Trentville, ZA. 1000 cartons are sold to
teenagers (it’s legal in Trentville) and the rest to adults. The
price elasticity of demand for cigarettes is 2.5 for teens and 0.10
for adults. If a tax raises the price of cigarettes by $0.40/pack,
a) How many cartons of cigarettes are sold per day to adults after
the tax? b) How many cartons of cigarettes are sold...
On a graph, show the effect of a per unit tax on SELLERS of cigarettes. (This...
On a
graph, show the effect of a per unit tax on SELLERS of cigarettes.
(This requires you to think about the shape of the demand curve for
cigarettes. You can assume a sort of neutral supply curve. Indicate
the change in price and quantity from the tax. The consumer and
producer surplus after the tax, the tax incidence on buyers and
sellers and the deadweight losss. Who pays more of this tax?
On a graph, show the effect of a per unit tax on SELLERS of cigarettes. (This...
On a graph, show the effect of a per unit tax on SELLERS of
cigarettes. (This requires you to think about the shape of the
demand curve for cigarettes. You can assume a sort of neutral
supply curve. Indicate the change in price and quantity from the
tax. The consumer and producer surplus after the tax, the tax
incidence on buyers and sellers and the deadweight losss. Who pays
more of this tax?
On a graph, show the effect of a per unit tax on SELLERS of cigarettes. (This...
On a graph, show the effect of a per unit tax on SELLERS of
cigarettes. (This requires you to think about the shape of the
demand curve for cigarettes. You can assume a sort of neutral
supply curve. Indicate the change in price and quantity from the
tax. The consumer and producer surplus after the tax, the tax
incidence on buyers and sellers and the deadweight losss. Who pays
more of this tax?
Thank you!!
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