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RON T PAGE alifornians Vote to Triple Cigarette Tax acramento, CA-Californians voted to more than triple the state tax on cigarettes from $0.87 a ck to $2.87 a pack, beginning April 1, 2017. hti-smoking groups say the higher price will reduce smoking in the state. They foresee the oportion of smokers falling from the current 11.6 percent of the population to as low as 7.1 percent 2020. e state treasurer is also applauding the higher price, but for different reasons. According to the

RON T PAGE alifornians Vote to Triple Cigarette Tax acramento, CA-Californians voted to more than triple the state tax on cigarettes from $0.87 a ck to $2.87 a pack, beginning April 1, 2017. hti-smoking groups say the higher price will reduce smoking in the state. They foresee the oportion of smokers falling from the current 11.6 percent of the population to as low as 7.1 percent 2020. e state treasurer is also applauding the higher price, but for different reasons. According to the

Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand And Government Policies
Section: Chapter Questions
Problem 4PA
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Was able to get the first two, but having trouble figure out the answers to one decimal place on the following:

FRON T PAGE Californians Vote to Triple Cigarette Tax Sacramento, CA-Californians voted to more than triple the state tax on cigarettes from $0.87 a pack to $2.87 a pack, beginning April 1, 2017. Anti-smoking groups say the higher price will reduce smoking in the state. They foresee the proportion of smokers falling from the current 11.6 percent of the population to as low as 7.1 percent by 2020. The state treasurer is also applauding the higher price, but for different reasons. According to the state's Legislature Analyst's Office (LAO), the additional $2 per pack tax will bring in $1.27-$1.61 billion a year to the state treasury. Both groups were wrong. Californians continued to smoke about 800 million cigarettes a year, disappointing health advocates. And the state netted much less than $1 billion in new tax revenue, disappointing the state treasurer. These disappointments are due to the fact that Californians can easily purchase cheaper cigarettes in neighboring states, on Indian reservations, and from smuggled supplies. Source: News reports, November 10, 2016.
Transcribed Image Text:FRON T PAGE Californians Vote to Triple Cigarette Tax Sacramento, CA-Californians voted to more than triple the state tax on cigarettes from $0.87 a pack to $2.87 a pack, beginning April 1, 2017. Anti-smoking groups say the higher price will reduce smoking in the state. They foresee the proportion of smokers falling from the current 11.6 percent of the population to as low as 7.1 percent by 2020. The state treasurer is also applauding the higher price, but for different reasons. According to the state's Legislature Analyst's Office (LAO), the additional $2 per pack tax will bring in $1.27-$1.61 billion a year to the state treasury. Both groups were wrong. Californians continued to smoke about 800 million cigarettes a year, disappointing health advocates. And the state netted much less than $1 billion in new tax revenue, disappointing the state treasurer. These disappointments are due to the fact that Californians can easily purchase cheaper cigarettes in neighboring states, on Indian reservations, and from smuggled supplies. Source: News reports, November 10, 2016.
Assuming that the price of a pack of cigarettes is $5 before the tax and if the actual price elasticity of demand for California-taxed cigarettes is 0.8, c. how much will the quantity demanded decrease with the new tax? percent d. how much additional revenue will the state take in? billion %24
Transcribed Image Text:Assuming that the price of a pack of cigarettes is $5 before the tax and if the actual price elasticity of demand for California-taxed cigarettes is 0.8, c. how much will the quantity demanded decrease with the new tax? percent d. how much additional revenue will the state take in? billion %24
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