Question
The government is worried about high rates of cigarette smoking and so it's considering implementing a cigarettes tax. The government knows that the demand for
The government is worried about high rates of cigarette smoking and so it's considering implementing a cigarettes tax. The government knows that the demand for cigarettes is very inelastic, and the supply of cigarettes is perfectly elastic. Which of the following statements are true? (Select all that apply.)
a. A tax on cigarettes is one way to make smokers internalize the cost of the externalities associated with smoking.
b. It doesn't matter how the tax is implemented.
c. There are positive externalities associated with smoking.
d.Smoking will decrease only slightly in the short-run.
e. Smoking will decrease more in the long-run than in the short-run.
f. Regardless of how the tax is implemented, consumers will pay the full amount of the tax.
g. Smoking will decrease more if the tax is the on the suppliers. h. Smoking will decrease more in the short-run than in the long-run. i. Consumers and suppliers will split the burden of the tax.
j. The government will collect more revenue if the tax is on the suppliers.
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