question archive Suppose the weekly demand for cigarettes(in thousands of packs) is given by D(P) = 90 — 20p and supply is given by S (p) = 10p and suppose there is a tax of 3$ per pack
Suppose the weekly demand for cigarettes(in thousands of packs) is given by D(P) = 90 — 20p and supply is given by S (p) = 10p and suppose there is a tax of 3$ per pack
Subject:EconomicsPrice: Bought3
Suppose the weekly demand for cigarettes(in thousands of packs) is given by D(P) = 90 — 20p and supply is given by S (p) = 10p and suppose there is a tax of 3$ per pack. a) (5 points) Find the equilibrium in the market for cigarettes before and after-tax is implemented. b) (15 points) Show your answer in a supply and demand diagram. Include after-tax, consumer surplus, producer surplus, tax revenue, and deadvveight loss. c) (5 points) Hovv is the tax incidence affected by the elasticity of demand? Explain. d) (Extra credit 5 points). Inelastic goods like cigarettes tend to be more heavily taxed than elastic goods. Explain based
