Top Posters
Since Sunday
s
3
v
3
p
3
m
2
s
2
d
2
N
2
d
2
e
2
s
2
s
2
e
2
Home Q & A Board Other Fields Homework Help Business Economics
New Topic  
Satsume Satsume
wrote...
Go to Answer
Posts: 761
Rep: 0 0
6 years ago
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?  What portion of the tax would be borne by buyers and sellers respectively?
c.   Calculate the deadweight loss from the tax.  Could the tax be justified despite the deadweight loss?  What tax revenue will be generated?
Textbook 
Microeconomics

Microeconomics


Edition: 8th
Author:
Read 480 times
5 Replies
Replies
Answer verified by a subject expert
boransalboransal
wrote...
#1
Posts: 477
Rep: 13 0
6 years ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
This verified answer contains over 390 words.

Related Topics

wrote...
#2
4 years ago
Thank you!
wrote...
#3
4 years ago
Thank you
wrote...
#4
4 years ago
Thank you)
wrote...
#5
3 years ago
thank you
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  991 People Browsing
 108 Signed Up Today
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Live Chat
Related Images
  
 386
  
 326
  
 238
Your Opinion
Previous poll results: Where do you get your textbooks?