b. Now suppose that New York City and State each impose a $1.50 specific tax on each
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b. Now suppose that New York City and State each impose a $1.50 specific tax on each pack of cigarettes, for a total of $3.00 per pack on all cigarettes possessed for sale or use in New York City. The retailers pay the tax. Using both math and a graph, show how the introduction of the tax shifts the market supply curve. How does the introduction of the tax affect the equilibrium retail price and quantity of cigarettes?
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