Suppose that the government imposes a tax on cigarettes. Use the diagram below to answer the questions. D is t demand curve before tax, S is the supply curve before tax and St is the supply curve after the tax. Price ST 18 12 -- 10 -- 10 12 Qua - -- N -- -9

Suppose that the government imposes a tax on cigarettes. Use the diagram below to answer the questions. D is t demand curve before tax, S is the supply curve before tax and St is the supply curve after the tax. Price ST 18 12 -- 10 -- 10 12 Qua - -- N -- -9

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

(e) (i) Calculate the consumer surplus after the tax.
Answer:

Expert Solution

Step 1

There is a market for Cigarettes, and the government imposes a tax on cigarettes.

The imposition of tax on cigarettes shifts the supply curve to the left from S to ST

D and S are original demand and supply curves respectively.

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