I need help please

t Score: 09% Resources Q Hint Check 1 10 Taxes - End of Chapter Problem The accompanying diagram shows the market for cigarettes. The current equilibrium price per pack is $4, and every day 40 million packs of cigarettes are sold. In order to recover some of the health care costs associated with smoking, the government imposes a tax of $2 per pack. This will raise the equilibrium price to $5 per pack and reduce the equilibrium quantity to 30 million packs. The economist working for the tobacco lobby claims that this tax will reduce consumer surplus for smokers by $40 million per day since 40 million packs now cost $1 more per pack. The economist working for the lobby for sufferers of secondhand smoke argues that this is an enormous overestimate and that the reduction in consumer surplus will be only $30 million per day since, after the imposition of the tax, only 30 million packs of cigarettes will be bought, and each of these packs will now cost $1 more. They are both wrong. Calculate the correct consumer surplus (CS) before and after the tax. Price of cigarettes (per pack) $8 Excise tax - $2 . . . . Krugman/Wells, Economics, be, 0 30 40 Quantity of cigarettes (millions of packs per day) CSbefore : $ million CSaner: $ million 140 8 9 O U O PQ Hint 0% Resources The graphs show the market for bags of potato chips, which is currently at an equilibrium price of $1.33 per bag 5.0 and an equilibrium quantity of 5.33 million bags. Suppose 45 that, in an attempt to lower blood pressure and reduce healthcare costs, the government imposes a $1.00 excise 40 (or commodity) tax on potato chips. 35 Suppose the government levies this tax on manufacturers 30 for each bag of potato chips they produce. Please shift the 25 appropriate curve or curves to illustrate this. Supply 15 10 05 Demand 00 1 2 3 4 5 6 9 10 Quantity (millions of bags) What is the price paid per bag by consumers (Pc) with this P. = S new tax? What is the price received net of tax (Pp) per bag by producers with this new tax? Pp = S Suppose the government, instead of levying the tax on producers, levies the tax on consumers for each bag of 50 potato chips they purchase. Please shift the appropriate curve or curves to illustrate this. 45 40 35 Price ($ per bag) 2 25 Supply 20 1.5 1.0 05 Demand 0.0 1 2 3 4 5 6 8 9 10 Quantity (millions of bags) What is the effective price paid per bag by consumers (Pc) with this new tax? Pc = $ What is the price received net of tax (Pp) per bag by producers with this new tax? Pp = $