5.6 Keeler et al. (2004) estimated that the U.S. Tobacco Settlement between major tobacco companies and 46 states caused the price of cigarettes to jump by 454 per pack (21%) and overall per capita cigarette consumption to fall by 8.3%. What is the elasticity of demand for cigarettes? Is cigarette demand elastic or inelastic? M 6.6 A subsidy is a negative tax through which the government gives people money instead of taking it from them. If the government applied a $1.05 specific subsidy instead of a specific tax in Figure 2.12 0, what would happen to the equilibrium price and quantity? Use the demand function and the after-subsidy supply function to solve for the new equilibrium values. What is the incidence of the subsidy on consumers? (Hint: See the Application "Subsidizing Ethanol."D) M 6.10 The estimated demand function for coffee is Q = 12 - p (Equation 2.30), and the estimated supply function is @ = 9 + 0.5p (Equation 2.72). 1. Write equations for the equilibrium price and quantity as a function of a specific tax t. 2. What are the equilibrium price and quantity and the tax incidence on consumers if t = $0.75? M *7.4 An increase in the minimum wage could raise the total wage payment, W = wL(w), where w is the minimum wage and L(w) is the demand function for labor, despite the fall in demand for labor services. Show that whether the wage payments rise or fall depends on the elasticity of demand of labor. M'51.: Soon after the United States revealed the discover}.r of a single case of mad cow disease in December l, more than 4i] countries slapped an embargo on LLS. beef. In addition, some US. consumers stopped eating beef. In the three weeks after the discovery, the quantity sold increased by 43% during the last week of October EDD-3, and the U.5. price in January 20134 fell by about 15%. Use supply- and-demand diagrams to explain why these events occurred