asured in packs sold per hour: 2, = 7,000 – 200P 2, = 1,000 + 600P Demand: Supply: Determine the equilibrium quantity and price for cigarettes in this region. Find the price elasticities of supply and demand at today's equilibrium price and quantity. Is demand elastic, inelastic, or unit elastic? Is supply elastic, inelastic, or unit elastic? Suppose the state establishes a new per-unit tax on cigarettes to fund a program that increases awareness of the effects of smoking on health. The size of the tax is $1.50 per pack of cigarettes. Determine the new effective (out-of-pocket) price that consumers will now pay when this tax is in effect. Determine the price that cigarette sellers will receive per pack, per hour, net of the tax payment to the government. (Assume that sellers remit the tax to the government.) Find the percentage burden of the tax borne by sellers and by consumers. Briefly explain why your result is consistent with the relative elasticities of supply and demand you found in part b. a. b. d.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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***Just part D please, thank you!!***

The following equations represent the supply and demand of cigarettes in a region,
measured in packs sold per hour:
Q, = 7,000 – 200P
Q, = 1,000 + 600P
Demand:
Supply:
Determine the equilibrium quantity and price for cigarettes in this region.
Find the price elasticities of supply and demand at today's equilibrium price
and quantity. Is demand elastic, inelastic, or unit elastic? Is supply elastic,
inelastic, or unit elastic?
Suppose the state establishes a new per-unit tax on cigarettes to fund a program
that increases awareness of the effects of smoking on health. The size of the
tax is $1.50 per pack of cigarettes. Determine the new effective (out-of-pocket)
price that consumers will now pay when this tax is in effect. Determine the
price that cigarette sellers will receive per pack, per hour, net of the tax payment
to the government. (Assume that sellers remit the tax to the government.)
Find the percentage burden of the tax borne by sellers and by consumers.
Briefly explain why your result is consistent with the relative elasticities of
supply and demand you found in part b.
a.
b.
с.
d.
Transcribed Image Text:The following equations represent the supply and demand of cigarettes in a region, measured in packs sold per hour: Q, = 7,000 – 200P Q, = 1,000 + 600P Demand: Supply: Determine the equilibrium quantity and price for cigarettes in this region. Find the price elasticities of supply and demand at today's equilibrium price and quantity. Is demand elastic, inelastic, or unit elastic? Is supply elastic, inelastic, or unit elastic? Suppose the state establishes a new per-unit tax on cigarettes to fund a program that increases awareness of the effects of smoking on health. The size of the tax is $1.50 per pack of cigarettes. Determine the new effective (out-of-pocket) price that consumers will now pay when this tax is in effect. Determine the price that cigarette sellers will receive per pack, per hour, net of the tax payment to the government. (Assume that sellers remit the tax to the government.) Find the percentage burden of the tax borne by sellers and by consumers. Briefly explain why your result is consistent with the relative elasticities of supply and demand you found in part b. a. b. с. d.
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