question archive If I have a perfectly elastic supply (horizontal), and the unit price of cigarettes goes up by increasing cigarette tax from 8 cents to $1

If I have a perfectly elastic supply (horizontal), and the unit price of cigarettes goes up by increasing cigarette tax from 8 cents to $1

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If I have a perfectly elastic supply (horizontal), and the unit price of cigarettes goes up by increasing cigarette tax from 8 cents to $1.50, I know the quantity demanded goes down, but what happens in the long term (specifically in regards to tax revenues of the city)?

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In a perfectly elastic supply, when there is a small increase or decrease in the price of goods, it will lead to a very large change in the quantity supplied. Hence, the price elasticity of supply is infinite. In the long-term, if the price of cigarettes goes up, the quantity demanded would remain the same because it is a habituated good. The burden of the tax would fall on the consumers but the increase in the tax or price would not affect the demand of consumers. Therefore, the tax revenue of the city will increase in the long-term.