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Consider a case where the initial price of a pack of cigarette is $1.50 per pack and the quantity sold and bought is 200,000 packs

Consider a case where the initial price of a pack of cigarette is $1.50 per pack and the quantity sold and bought is 200,000 packs per day. Assuming an elasticity of demand of -0.85 and elasticity of supply of 2.5,

(a)Calculate the tax revenue and excess burden if the excise tax on each pack of cigarette is $1.50.

(b)Suppose the elasticity of demand is -0.45 and the elasticity of supply is 1.05, what is the incidence of the tax on (i) the consumers (ii) the producer

(c)What is the new tax revenue and excess burden?

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