In his fiscal year(FY0 2015 budget proposal, President Obama envisions another hike in the federal excise tax on cigarettes. He engineered a tripling of the tax-form 39 cents to $1.01 per pack- in 2009. Now he wants to hike the tax by another 94 cents, to $1.95 per pack. It's easy to see why Obama(himself a smoker) likes the idea. The 2009 tax hike brought an extra $9 billion a year into the U.S. treasury, it also reduced smoking and smoking-related health costs. This time around the Congressional Budget office projects a 94 cent tax hike will increase federal revenue by $78 billion over ten years, helping to bring down project deficits. The CBO also projects that the higher price will reduce the number of smokers by 2.5 million and the number of smoking-related deaths by 18,000 over the same period. Smokers don't like the idea at all,of course.Nor do the states,which will see their own tax revenues decline along with the cigarette sales. and convenience stores like 7-Eleven will see a big part of their profits go up in smoke If the price of a pack of cigarettes(including taxes) was $6 before the proposed 2015 tax hike was approved. (a) what was the price after tax hike? (b) what was the (average) percentage increase in price? (c) if cigarette sales decline by 7.2 percent,what is the price elasticity of demand?
In his fiscal year(FY0 2015 budget proposal, President Obama envisions another hike in the federal excise tax on cigarettes. He engineered a tripling of the tax-form 39 cents to $1.01 per pack- in 2009. Now he wants to hike the tax by another 94 cents, to $1.95 per pack. It's easy to see why Obama(himself a smoker) likes the idea. The 2009 tax hike brought an extra $9 billion a year into the U.S. treasury, it also reduced smoking and smoking-related health costs.
This time around the Congressional Budget office projects a 94 cent tax hike will increase federal revenue by $78 billion over ten years, helping to bring down project deficits. The CBO also projects that the higher price will reduce the number of smokers by 2.5 million and the number of smoking-related deaths by 18,000 over the same period.
Smokers don't like the idea at all,of course.Nor do the states,which will see their own tax revenues decline along with the cigarette sales. and convenience stores like 7-Eleven will see a big part of their profits go up in smoke
If the price of a pack of cigarettes(including taxes) was $6 before the proposed 2015 tax hike was approved.
(a) what was the price after tax hike?
(b) what was the (average) percentage increase in price?
(c) if cigarette sales decline by 7.2 percent,what is the
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