Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 6, Problem 3TY
(a)
To determine
Use of tax to collect more tax revenue.
(b)
To determine
Use of tax to distort
(c)
To determine
Use of tax to discourage the consumption.
(d)
To determine
Use of tax to discourage the production.
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Suppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.8 and 0.7 respectively. Suppose the government imposes a per-unit tax of $45
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