Suppose that the demand and supply for cigarettes in a country are given by
Qd = 2000 - 200P
Qs = P * 200
where Qd is the number of packets demanded
P is the price per packet
Qs is the supply of cigarettes
Question
1. Find the price and quantity of cigarettes assuming the market is competitive.
2.In an effort to reduce smoking,the govt levies a tax of $2 per packet.
(a) Compute the quantity of cigarettes after the tax,the price paid by the consumers,and the price received by the producers.?
(b)Compute how much revenue does the tax raise for govt?
Qd = 2000 - 200P
Qs = P * 200
where Qd is the number of packets demanded
P is the price per packet
Qs is the supply of cigarettes
Question
1. Find the price and quantity of cigarettes assuming the market is competitive.
2.In an effort to reduce smoking,the govt levies a tax of $2 per packet.
(a) Compute the quantity of cigarettes after the tax,the price paid by the consumers,and the price received by the producers.?
(b)Compute how much revenue does the tax raise for govt?