asured in packs sold per hour: 2, = 7,000 – 200P 2, = 1,000 + 600P Demand: Supply: Determine the equilibrium quantity and price for cigarettes in this region. Find the price elasticities of supply and demand at today's equilibrium price and quantity. Is demand elastic, inelastic, or unit elastic? Is supply elastic, inelastic, or unit elastic? Suppose the state establishes a new per-unit tax on cigarettes to fund a program that increases awareness of the effects of smoking on health. The size of the tax is $1.50 per pack of cigarettes. Determine the new effective (out-of-pocket) price that consumers will now pay when this tax is in effect. Determine the price that cigarette sellers will receive per pack, per hour, net of the tax payment to the government. (Assume that sellers remit the tax to the government.) Find the percentage burden of the tax borne by sellers and by consumers. Briefly explain why your result is consistent with the relative elasticities of supply and demand you found in part b. a. b. d.

asured in packs sold per hour: 2, = 7,000 – 200P 2, = 1,000 + 600P Demand: Supply: Determine the equilibrium quantity and price for cigarettes in this region. Find the price elasticities of supply and demand at today's equilibrium price and quantity. Is demand elastic, inelastic, or unit elastic? Is supply elastic, inelastic, or unit elastic? Suppose the state establishes a new per-unit tax on cigarettes to fund a program that increases awareness of the effects of smoking on health. The size of the tax is $1.50 per pack of cigarettes. Determine the new effective (out-of-pocket) price that consumers will now pay when this tax is in effect. Determine the price that cigarette sellers will receive per pack, per hour, net of the tax payment to the government. (Assume that sellers remit the tax to the government.) Find the percentage burden of the tax borne by sellers and by consumers. Briefly explain why your result is consistent with the relative elasticities of supply and demand you found in part b. a. b. d.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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