The following diagram shows the market for cigarettes.The current equilibrium price per pack is $4, and every day 36 million packs of cigarettes are sold.Draw the diagram to answer the next questions.

Question 1: In order to recover some of the health care costs associated with smoking, the government imposes a tax of $______ per pack. This will raise the equilibrium price to $6 per pack and reduce the equilibrium quantity to 32 million packs.The economist working for the tobacco lobby claims that this tax will reduce consumer surplus for smokers by $72 million per day, since 36 million packs now cost $2 more per pack. The economist working for the lobby for sufferers of second-hand smoke argues that this is an enormous overestimate and that the reduction in consumer surplus will be only $64 million per day, since after the imposition of the tax only 32 million packs of cigarettes will be bought and each of these packs will now cost $2 more.Considering each side's argument, which of the following is true?

A. Tobacco lobbyist is wrong; health advocate is right.

B. Tobacco lobbyist is right; health advocate is wrong.

C. Both are wrong.

D. Both are right, depending on whether demand for cigarettes is elastic or inelastic.

Question 2: In the previous question, the loss in consumer surplus by those who continue to smoke is $______, and by those who stopped smoking after the tax increase is $______ million.

A. 62 2

B. 62 4

C. 64 2

D. 64 4

Question 3: Including the deadweight loss, the total tax burden borne by producers is $______.

A. 32 Million

B. 34 Million

C. 36 Million

D. 38 Million