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Assign4 - James E Pesando Economics 100 Assignment#4...

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James E. Pesando Economics 100 Assignment #4 Applications of Demand and Supply; Consumer Demand Theory Consumer Surplus = Q(WTP-P) 1. The government eliminates the $10 tax on a carton of cigarettes. The tax on cigarettes is paid by sellers. The supply curve for cigarettes is positively sloped. (a) Assuming that the demand curve for cigarettes is downward sloping, draw a diagram to show the old market price and the new market price, as well as the old and the new quantity of cigarettes bought and sold in the market. (b) What is the maximum change in the market price of a carton of cigarettes? If this maximum price change takes place, what would be the change in the quantity of cigarettes bought and sold? 2. A 15 percent tax imposed on the sellers of accounting, economics, business and chemistry textbooks resulted in the following price increases. The supply curves for all of these goods have the usual positive slope.
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