6. (19 pts) The figure below represents demand and supply in the market for cigarettes. Use the diagram to answer the following questions. Price ($ per pack) S2 Таx $2.50 1.50 1.25 Demand Quantity (billions of packs per year) 01 18 20 a. How much is the government tax on each pack of cigarettes?250-14 b. What portion of the unit tax is paid by consumers? c. What portion of the unit tax is paid by producers? d. What is the quantity sold after the imposition of the tax? e. What is the after-tax revenue per pack received by producers? f. What is the total tax revenue collected by the government? g. What is the value of the excess burden of the tax? h. Is this cigarette tax efficient?

6. (19 pts) The figure below represents demand and supply in the market for cigarettes. Use the diagram to answer the following questions. Price ($ per pack) S2 Таx $2.50 1.50 1.25 Demand Quantity (billions of packs per year) 01 18 20 a. How much is the government tax on each pack of cigarettes?250-14 b. What portion of the unit tax is paid by consumers? c. What portion of the unit tax is paid by producers? d. What is the quantity sold after the imposition of the tax? e. What is the after-tax revenue per pack received by producers? f. What is the total tax revenue collected by the government? g. What is the value of the excess burden of the tax? h. Is this cigarette tax efficient?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter3: Economic Decision Makers

Section: Chapter Questions

Problem 3.11P

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