Question

Assuming that the price of a pack of cigarettes is $5 before the tax and if the actual price elasticity of demand for California-taxed cigarettes is 0.8,
c. By how much will the quantity demanded decrease with the new tax?
d. How much additional revenue will the state take in?

Answer 1

Answer:

Assuming that the price of a pack of cigarettes is $5 before the tax and if the actual price elasticity of demand for California-taxed cigarettes is 0.8,

c. By how much will the quantity demanded decrease with the new tax?

d. How much additional revenue will the state take in?

Explanation:

Assuming that the price of a pack of cigarettes is $5 before the tax and if the actual price elasticity of demand for California-taxed cigarettes is 0.8,

c. By how much will the quantity demanded decrease with the new tax?

d. How much additional revenue will the state take in?

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