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In an effort to curb the use of cigarettes, the US has utilized taxes to inhibit the purchase of them to help the population’s health. The price for cigarettes without a tax would be $2.50/pack. In that market, 950M cigarette packs would be the quantity sold each year. The government has inserted $2.00 tax/pack of cigarette. This tax reduces the amount of quantity demand to 600M cigarettes and the $2 tax is burdened 25% by the producer and 75% by the consumer. Please illustrate a supply and demand chart that indicates the areas of consumer surplus, tax revenue, deadweight loss, and producer surpluses with both quantities shown

In an effort to curb the use of cigarettes, the US has utilized taxes to inhibit the purchase of them to help the population’s health. The price for cigarettes without a tax would be $2.50/pack. In that market, 950M cigarette packs would be the quantity sold each year. The government has inserted $2.00 tax/pack of cigarette. This tax reduces the amount of quantity demand to 600M cigarettes and the $2 tax is burdened 25% by the producer and 75% by the consumer. Please illustrate a supply and demand chart that indicates the areas of consumer surplus, tax revenue, deadweight loss, and producer surpluses with both quantities shown

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter4: Estimating Demand
Section: Chapter Questions
Problem 6E
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In an effort to curb the use of cigarettes, the US has utilized taxes to inhibit the purchase of them to help the population’s health. The price for cigarettes without a tax would be $2.50/pack. In that market, 950M cigarette packs would be the quantity sold each year. The government has inserted $2.00 tax/pack of cigarette. This tax reduces the amount of quantity demand to 600M cigarettes and the $2 tax is burdened 25% by the producer and 75% by the consumer.

Please illustrate a supply and demand chart that indicates the areas of consumer surplus, tax revenue, deadweight loss, and producer surpluses with both quantities shown.

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