What are the likely consequences on the U.S. market for tobacco products for each of the events listedbelow? Which curve shifts, supply or demand?Please indicate the direction of shift. State whetherthe equilibrium price and quantity would increase,decrease, or stay the same. Show the changes usinga standard diagram with an upward-sloping supplycurve and a downward-sloping demand curve.a. The Food and Drug Administration classifiestobacco as an “addictive substance.”b. The Congress votes to raise the excise tax on alltobacco products.c. Hurricane Fran dumps 15 inches of rain onNorth Carolina and destroys 80 percent of thatstate’s tobacco crop.d. Sixteen states sue the major tobacco companiesfor billions of dollars because of tobacco-relatedcosts in their Medicaid programs.e. Medical evidence that more than two cups ofcoffee a day, considered by many to be a substitute for smoking, greatly increases the risk ofstomach cancer
What are the likely consequences on the U.S. market for tobacco products for each of the events listed
below? Which curve shifts, supply or
Please indicate the direction of shift. State whether
the
decrease, or stay the same. Show the changes using
a standard diagram with an upward-sloping supply
curve and a downward-sloping demand curve.
a. The Food and Drug Administration classifies
tobacco as an “addictive substance.”
b. The Congress votes to raise the excise tax on all
tobacco products.
c. Hurricane Fran dumps 15 inches of rain on
North Carolina and destroys 80 percent of that
state’s tobacco crop.
d. Sixteen states sue the major tobacco companies
for billions of dollars because of tobacco-related
costs in their Medicaid programs.
e. Medical evidence that more than two cups of
coffee a day, considered by many to be a substitute for smoking, greatly increases the risk of
stomach cancer
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