region, Tollowing equations represei measured in packs sold per hour: supply and demand cigarettes Q, = 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, inclastic, 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.) a. b. с.

region, Tollowing equations represei measured in packs sold per hour: supply and demand cigarettes Q, = 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, inclastic, 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.) a. b. с.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that you observe that when the price of cigarettes rises by 10%, the quantity of cigarettes purchased falls by 8.7%. This implies that cigarettes are price in demand and that the price elasticity of demand is equal to elastic; 1.15 inelastic; 1.15 inelastic; 0.87 O elastic; 0.87
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