In the state of Santa Lucia cigarettes were selling for $8.03 per pack before a $0.25 per pack increase. Last year about 3.8 million pack of cigarettes were sold per month at $8.03 per pack. The price elasticity of demand for cigarette packs is -1.35. How much revenue, in millions of dollars, will be produced each month from this new tax?

Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter4: Demand And Demand: Applications And Extensions
Section: Chapter Questions
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In the state of Santa Lucia cigarettes were selling for $8.03 per pack before a $0.25 per pack increase.
Last year about 3.8 million pack of cigarettes were sold per month at $8.03 per pack. The price
elasticity of demand for cigarette packs is -1.35. How much revenue, in millions of dollars, will be
produced each month from this new tax?
Transcribed Image Text:In the state of Santa Lucia cigarettes were selling for $8.03 per pack before a $0.25 per pack increase. Last year about 3.8 million pack of cigarettes were sold per month at $8.03 per pack. The price elasticity of demand for cigarette packs is -1.35. How much revenue, in millions of dollars, will be produced each month from this new tax?
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