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Suppose the weekly demand for cigarettes(in thousands of packs) is given by ()=9020 D(p)=90-20p and supply is given by ()=10 S(p)=10p and suppose there is
Suppose the weekly demand for cigarettes(in thousands of packs) is given by ()=9020 D(p)=90-20p and supply is given by ()=10 S(p)=10p and suppose there is a tax of 3$ per pack. a) (5 points) Find the equilibrium in the market for cigarettes before and after-tax is implemented. b) (15 points) Show your answer in a supply and demand diagram. Include after-tax, consumer surplus, producer surplus, tax revenue, and deadweight loss. c) (5 points) How is the tax incidence affected by the elasticity of demand? Explain. d) (Extra credit 5 points). Inelastic goods like cigarettes tend to be more heavily taxed than elastic goods. Explain based on economic analysis why this is the case
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