Recently, the Obama administration proposed a $1.00 per unit (pack) excise tax on cigarettes (which would be imposed legally or statutorily on cigarettes sellers). Some news reports have suggested that the proposed tax would increase cigarettes prices by $1.00 per pack and be paid by smokers (cigarette buyers). Using (separate) competitive supply and demand diagrams of the cigarettes market carefully show and explain TWO extreme demand and supply conditions under which these news reports would be true?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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1. Recently, the Obama administration proposed a $1.00 per unit (pack) excise tax on
cigarettes (which would be imposed legally or statutorily on cigarettes sellers). Some
news reports have suggested that the proposed tax would increase cigarettes prices by
$1.00 per pack and be paid by smokers (cigarette buyers). Using (separate) competitive
supply and demand diagrams of the cigarettes market carefully show and explain TWO
extreme demand and supply conditions under which these news reports would be true?
2. Nimbus, Inc., makes brooms and then sells them door- to-door. Here is the relationship
between the number of workers and Nimbus's output during a given day:
Average
Total cost
Marginal
Cost
Total Cost
Marginal
Product
Workers
Output
0.
20
50
90
4
120
140
6.
150
155
a. Fill in the column of marginal products. What pattern do you see? How might you
explain it?
W
Transcribed Image Text:1. Recently, the Obama administration proposed a $1.00 per unit (pack) excise tax on cigarettes (which would be imposed legally or statutorily on cigarettes sellers). Some news reports have suggested that the proposed tax would increase cigarettes prices by $1.00 per pack and be paid by smokers (cigarette buyers). Using (separate) competitive supply and demand diagrams of the cigarettes market carefully show and explain TWO extreme demand and supply conditions under which these news reports would be true? 2. Nimbus, Inc., makes brooms and then sells them door- to-door. Here is the relationship between the number of workers and Nimbus's output during a given day: Average Total cost Marginal Cost Total Cost Marginal Product Workers Output 0. 20 50 90 4 120 140 6. 150 155 a. Fill in the column of marginal products. What pattern do you see? How might you explain it? W
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