Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.PRICE (Dollars per pack)109810SupplyDemand0 10 20 30 40 50 60 70 80 90 100QUANTITY (Packs)Suppose the government imposes a $2-per-pack tax on suppliers.At this tax amount, the equilibrium quantity of cigarettes isGraph Input ToolMarket for CigarettesQuantity(Packs)Demand Price(Dollars per pack)Tax(Dollars per pack)406.002.00Supply Price(Dollars per pack)packs, and the government collects4.00in tax revenue. Suppose the government imposes a $2-per-pack tax on suppliers.At this tax amount, the equilibrium quantity of cigarettes isTAX REVENUE (Dollars)Now calculate the government's tax revenue if it sets a tax of $0, $2, $4, $5, $6, $8, or $10 per pack. (Hint: To find the equilibrium quantity after thetax, adjust the "Quantity" field until the Tax equals the value of the per-unit tax.) Using the data you generate, plot a Laffer curve by using the greenpoints (triangle symbol) to plot total tax revenue at each of those tax levels.Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.2001801601401201008060402000+1True23456TAX (Dollars per pack)O False789packs, and the government collects104Suppose the government is currently imposing a $3-per-pack tax on cigarettes.Laffer CurveTrue or False: The government can raise its tax revenue by increasing the per-unit tax on cigarettes.in tax revenue.

The Laffer curve illustrates the tax revenue at each possible level of tax rate.

Answered: Suppose the government imposes a…

Suppose the government imposes a $2-per-pack tax on suppliers. At this tax amount, the equilibrium quantity of cigarettes is packs, and the government collects $ in tax revenue.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
PRICE (Dollars per pack)
10
9
8
1
0
Supply
Demand
0 10 20 30 40 50 60 70 80 90 100
QUANTITY (Packs)
Suppose the government imposes a $2-per-pack tax on suppliers.
At this tax amount, the equilibrium quantity of cigarettes is
Graph Input Tool
Market for Cigarettes
Quantity
(Packs)
Demand Price
(Dollars per pack)
Tax
(Dollars per pack)
40
6.00
2.00
Supply Price
(Dollars per pack)
packs, and the government collects
4.00
in tax revenue.

Suppose the government imposes a $2-per-pack tax on suppliers.
At this tax amount, the equilibrium quantity of cigarettes is
TAX REVENUE (Dollars)
Now calculate the government's tax revenue if it sets a tax of $0, $2, $4, $5, $6, $8, or $10 per pack. (Hint: To find the equilibrium quantity after the
tax, adjust the "Quantity" field until the Tax equals the value of the per-unit tax.) Using the data you generate, plot a Laffer curve by using the green
points (triangle symbol) to plot total tax revenue at each of those tax levels.
Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
200
180
160
140
120
100
80
60
40
20
0
0
+
1
True
2
3
4
5
6
TAX (Dollars per pack)
O False
7
8
9
packs, and the government collects
10
4
Suppose the government is currently imposing a $3-per-pack tax on cigarettes.
Laffer Curve
True or False: The government can raise its tax revenue by increasing the per-unit tax on cigarettes.
in tax revenue.

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