4. The Laffer curve Government-imposed taxes cause reductions in the activity that is being taxed, which has important implications for revenue collections. To understand the effect of such a tax, consider the monthl'l-r market for cigarettes, which is shown on the following graph. Use the graph input tool to help you answer me following questions. You will not he graded on any changes you make to this graph. Note: lIZJnce you enter a I.ialue in a white eld, the graph and any corresponding amounts in each grelir eld will change accordingly. \fSuppose the government imposes a $2-perpack tax on suppliers. At this tax amountI the equilibrium quantity of cigarettes is :l packs, and the government collects in tax revenue. Now calculate the government's tax revenue if it sets a tax of $0, $2, $4, $5, $6, $8, or Sit] per pack. (Hint: To nd the equlllbrlum quantity after the tax, adjust the "Quantity\"eld until the Tax equals the Ivalue of the perunit tax.) Uslhg the data you generate, plot a Latter curve by using the green oolh ts {triangle symbol) to plot total tax revenue at each of these tax levels. Note: Plot your points in the orderin which you would like them connected. Line segments Will connect the points automatically. (2) \fSuppose the government is currently imposing a $3-perpack tax on cigarettes. True or False: The government can raise its tax revenue by increasing the perunit tax on cigarettes. 0 True 0 False Consider the deadweight loss generated in each of the following cases: no tax, a tax of $4 per pack, and a tax of $8 per pack. On the foh'owing graph, use the hiack curve (plus symbols) to ifiustrate the deadweight J'DSS in these cases. (Hint: Remember that the area of a l 2 and the height is the reduction in quantity caused by the tax.) tn'ahgi'e is equai to x Base x Height. In the case of a deadweight ioss triangie found on the graph input too}, the base is the amount of the tax