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In an effort to curb the use of cigarettes, the US has utilized taxes to inhibit the purchase of them to help the population’s health. The price for cigarettes without a tax would be $2.50/pack. In that market, 950M cigarette packs would be the quantity sold each year. The government has inserted $2.00 tax/pack of cigarette. This tax reduces the amount of quantity demand to 600M cigarettes and the $2 tax is burdened 25% by the producer and 75% by the consumer. Please illustrate a supply and demand chart that indicates the areas of consumer surplus, tax revenue, deadweight loss, and producer surpluses with both quantities shown

In an effort to curb the use of cigarettes, the US has utilized taxes to inhibit the purchase of them to help the population’s health. The price for cigarettes without a tax would be $2.50/pack. In that market, 950M cigarette packs would be the quantity sold each year. The government has inserted $2.00 tax/pack of cigarette. This tax reduces the amount of quantity demand to 600M cigarettes and the $2 tax is burdened 25% by the producer and 75% by the consumer. Please illustrate a supply and demand chart that indicates the areas of consumer surplus, tax revenue, deadweight loss, and producer surpluses with both quantities shown

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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In an effort to curb the use of cigarettes, the US has utilized taxes to inhibit the purchase of them to help the population’s health. The price for cigarettes without a tax would be $2.50/pack. In that market, 950M cigarette packs would be the quantity sold each year. The government has inserted $2.00 tax/pack of cigarette. This tax reduces the amount of quantity demand to 600M cigarettes and the $2 tax is burdened 25% by the producer and 75% by the consumer.

Please illustrate a supply and demand chart that indicates the areas of consumer surplus, tax revenue, deadweight loss, and producer surpluses with both quantities shown.

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