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A country which does not tax cigarettes is considering the introduction of a 040 per pack tax

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A country which does not tax cigarettes is considering the introduction of a 040 per pack tax. 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 and The country has hired you to;provide the following information regarding the cigarette market and the proposed tax.;a. What are the equilibrium price and quantity in the current environment with no tax?;b. What price and quantity would prevail after the imposition of the tax?;c. What portion of the tax would be borne by buyers and sellers respectively?;d. Calculate the deadweight loss from the tax and illustrate it graphically.;e. What tax revenue will be generated?

 

Paper#30757 | Written in 18-Jul-2015

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