Answer to Question #42464 in Macroeconomics for Trevor

Question

The following table shows the data for the market for cigarettes. Answer the following questions in the space provided.

Supply (‘000) 200 250 300 350 400 450 500
Demand (‘000) 475 450 425 400 375 350 325
Price/packet 4.00 5.00 6.00 7.00 8.00 9.00 10.00

(a) If the government imposes a tax of $2 per packet on cigarettes, then new price will be: .$...........per packet??

(b) With the tax revenue , producers now will receive new revenue of $??......../wk in total revenue

Answer 1

(a) 13
(b) 650