suppose that the market for cigarettesin the town of lung Cancer can be expressed as :

Qs=P

and

Qd=1002P.

The quantity id measured in thousands. Suppose that the town council needs $500,000in additional revenue to pay for the extra health care expenses of high lung cancer rates. They have decided to tax the cigarette market.

What would be the excise tax levied on cigarettes to generate this revenue?

How much wouldcigarette consumption drop?