Maryland Tobacco Tax Increase Is a Big Win Maryland is raising the state tobacco tax by $1.75
Question:
Maryland Tobacco Tax Increase Is a Big Win Maryland is raising the state tobacco tax by $1.75 a pack. This is a health win that will reduce smoking and save lives, a financial win that will raise much-needed revenue, and a political win that polls show is popular with voters.
a. How will the Maryland market for cigarettes respond to the tax increase?
b. Cigarette prices are lower in neighboring Virginia and West Virginia. How does shopping in these states impact the elasticity of demand for cigarettes in Maryland?
c. Does an increase in the tax necessarily bring an increase in the tax revenue?
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a The Maryland market for cigarettes will likely see a decrease in demand due to the increased tax This tax raises the price of each pack making it mo...View the full answer
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