Calculate the price and quantity effect of the tax increase. The price effect (the revenue gained from the increase in T) is $ _______ million. The quantity effect (the revenue lost from the decrease in Q) is $_______ million. (remember to use a negative sign here since it's lost revenue)
Calculate the price and quantity effect of the tax increase. The price effect (the revenue gained from the increase in T) is $ _______ million. The quantity effect (the revenue lost from the decrease in Q) is $_______ million. (remember to use a negative sign here since it's lost revenue)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The government raises taxes on cigarettes from $1 per to $2 per pack. Prior to the tax increase, 5 million packs were sold each year. The new
(Answer part a by filling the blanks for both parts).
a. Calculate the
The price effect (the revenue gained from the increase in T) is $ _______ million.
The quantity effect (the revenue lost from the decrease in Q) is $_______ million. (remember to use a negative sign here since it's lost revenue)
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