Question 21 Not yet answered Paints out of 1 P Flag question Which of the follow

Question

Question 21 Not yet answered Paints out of 1 P Flag question Which of the following statements is TRUE regarding cigarette taxes? Select one: O a. Cigarette manufacturers tend to ship their product from low-tax states to high-tax states O b. After tax prices received by cigarette manufacturers are about the same in all states G. Cigarette manufacturers bear almost all of the cigarette taxes. O d. The elasticity of cigarette supply in all states is very small so cigarette manufacturers receive higher after tax prices in higher-tax Finis states. Question 22 Not yet answered Points out of 1 The shortages that result from imposing price controls Select one: O a only last for a short while until markets can adjust to the new lower prices O b. are rarely recognized by the public as a result of the price controls themselves c.typically lead the public to lobby politicians to repeal the price controls d.create higher prices. ? Question 23 Not yet answered Points our of 1 Flag question If buyers are required to pay a tax on top of the price, buyers willingness to pay wl Select one: o a. increase and the demand curve will shift down. O b. decrease and the demand curve will shift up. O G decrease and the demand curve will shift down. O d. increase and the demand curve will shift up.

Explanation / Answer

a) "D"

The elasticity of cigarette is very small so the sellers receive a higher after-tax price in states where taxes are high. The answer is "D".

b) "D"

Price control leads to a higher price as the shortage created is filled by the black market and increase the rent eking behaviour of the sellers.  

c) "C"

Demand curve will shift down and the quantity sold will decrease.

d) "B"

C and the equilibrium price and quantity are P1 and Q2. tax on buyer will shift the demand curve leaving the supply curve as it is.

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