Question 5 uppose that the government imposes a tax on cigarettes. Use the diagram below to answer the questions. O is the demand curve before tax, S is the supply curve before tax and ST is the supply curve after the tax. Price 18 12 10 3)

Question 5 uppose that the government imposes a tax on cigarettes. Use the diagram below to answer the questions. O is the demand curve before tax, S is the supply curve before tax and ST is the supply curve after the tax. Price 18 12 10 3)

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 5CQQ: An increase in the supply of a good will decrease the total revenue producers receive if a. the...

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Question

from the image calculate :

1. consumer surplus before tax

2. producer surplus before tax

Question 5
Suppose that the government imposes a tax on cigarettes. Use the diagram below to answer the questions.
D is the demand curve before tax, S is the supply curve before tax and St is the supply curve after the tax.
Price
18
12
10
7
10
12

Definition Definition Producer’s gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price and up to the equilibrium quantity.

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