New York has the highest cigarette taxes in the country. The price of an average pack of cigarettes in New York City is $10.60. The combined state and city taxes are $5.95 a pack. The average income of smokers is less than that of non-smokers Draw a graph to show the effects of the $5.95 tax on the buyer's price, the seller's price, the quantity of cigarettes bought, and the tax revenue. Does the buyer or seller pay more of the tax? Why? The graph shows the market for cigarettes with no tax. Draw a point to show the market equilibrium quantity and price. Label it 1. Draw a line that shows how a $6 per pack tax changes the supply of cigarettes. Label it S+ tax. Draw a point at the new equilibrium quantity to show the price paid by buyers. Label it 2. Draw a point at the new equilibrium quantity to show the price received by the seller. Label it 3. Draw a shape that represents the tax revenue received by the government. The pays more of the tax because OA. buyer; sellers can always pass on the tax to buyers OB. buyer, the elasticity of supply is greater than the elasticity demand OC. seller; competition among sellers forces sellers to absorb the tax and not pass it on to buyers OD. seller, the elasticity of demand is greater than the elasticity of supply esc 2 AA 7 9 W 3 e C $ 4 r % 5 t וום 6 C y & 7 O u * 8 26- 24- 22- 20 18 14 10 4- 2- ( 9 Price (dollars per pack) Quantity (millions of nacks) % O O 4 р Q Next US 4:
New York has the highest cigarette taxes in the country. The price of an average pack of cigarettes in New York City is $10.60. The combined state and city taxes are $5.95 a pack. The average income of smokers is less than that of non-smokers Draw a graph to show the effects of the $5.95 tax on the buyer's price, the seller's price, the quantity of cigarettes bought, and the tax revenue. Does the buyer or seller pay more of the tax? Why? The graph shows the market for cigarettes with no tax. Draw a point to show the market equilibrium quantity and price. Label it 1. Draw a line that shows how a $6 per pack tax changes the supply of cigarettes. Label it S+ tax. Draw a point at the new equilibrium quantity to show the price paid by buyers. Label it 2. Draw a point at the new equilibrium quantity to show the price received by the seller. Label it 3. Draw a shape that represents the tax revenue received by the government. The pays more of the tax because OA. buyer; sellers can always pass on the tax to buyers OB. buyer, the elasticity of supply is greater than the elasticity demand OC. seller; competition among sellers forces sellers to absorb the tax and not pass it on to buyers OD. seller, the elasticity of demand is greater than the elasticity of supply esc 2 AA 7 9 W 3 e C $ 4 r % 5 t וום 6 C y & 7 O u * 8 26- 24- 22- 20 18 14 10 4- 2- ( 9 Price (dollars per pack) Quantity (millions of nacks) % O O 4 р Q Next US 4:
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:New York has the highest cigarette taxes in the country. The price of an average pack of cigarettes in New York City is $10.60. The combined state and city taxes are $5.95 a pack. The average income of smokers is less than that of non-smokers
Draw a graph to show the effects of the $5.95 tax on the buyer's price, the seller's price, the quantity of cigarettes bought, and the tax revenue. Does the buyer or seller pay more of the tax? Why?
The graph shows the market for cigarettes with no tax.
Draw a point to show the market equilibrium quantity and price. Label it 1.
Draw a line that shows how a $6 per pack tax changes the supply of cigarettes. Label it S+ tax.
Draw a point at the new equilibrium quantity to show the price paid by buyers. Label it 2.
Draw a point at the new equilibrium quantity to show the price received by the seller. Label it 3.
Draw a shape that represents the tax revenue received by the government.
The
pays more of the tax because
OA. buyer; sellers can always pass on the tax to buyers
OB. buyer, the elasticity of supply is greater than the elasticity demand
O c. seller; competition among sellers forces sellers to absorb the tax and not pass it on to buyers
OD. seller, the elasticity of demand is greater than the elasticity of supply
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