Question
Asked Nov 19, 2019
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Using supply and demand curves, show the effect of each of the following events on themarket for cigarettes.  Draw bith the supply and demand curves.

a. A cure for lung cancer is found.

b. The price of cigars increases.

C. Wages increase substantially in states that frow tobacco.

d. More states pass laws restricting smoking in public areas

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Since we answer only up to 3 sub-parts at a time, we are answering the first three. If you want to get answered for the other sub-part as well then kindly upload the question again and one of our experts will help you.

(a) If the cure for lung cancer is found then it will lead to an increased demand of cigars because the people who left smoking or reduced smoking due to its harmful effects will start smoking more and this will lead to a rightward shift in the demand curve for cigars from DD to DD'. The initial demand curves are DD and SS and the new demand curve is DD'. There is an increase in the equilibrium price as well as equilibrium quantity.

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Price SS P DD' DD Q' Quantity

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(b) If there is an increase in the price of cigars then the quantity demanded of cigars will fall due to which the demand curve will shi...

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Price DD DD P P Quantity Q'Q SS

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