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Let QD = 80 20P be the demand function for cigarrets and let QS = 10P 10 be the supply. Suppose the government introduces a

Let QD = 80 20P be the demand function for cigarrets and let QS = 10P 10 be the supply. Suppose the government introduces a specific tax of = 1 to be levied from the producers (1)Obtain the new supply curve. (2) Determine the equilbrium quantity and price under the tax. (3)Compute the government revenue. (4) Compute the incidence (burden) on the consumers. (5)Compute the incidence (burden) on the producers. (6)Compute the deadweight loss. (7) Draw a diagram with all your analysis.

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