Micro Economics

The University of Texas at Austin LBJ School of Public Affairs 3. Total cigarette consumption in the US was 16 billion packs in 2011, for which the average retail prices was $5.00 per pack. (a) Given that the elasticity of supply is 0.5 and the elasticity of demand is -0.4, derive linear demand and supply curves for cigarettes. (b) The federal government imposes a tax on cigarettes of $1 .00 per pack. What are the new market-clearing price and quantity? (c) What share of the tax do consumers pay? How much do producers pay