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Unformatted text preview: price? What is consumer surplus & producer surplus in equilibrium? 3. Suppose that a flat per unit tax of $1.5 is imposed on cigarettes. a) What are the new equilibrium price and quantity? b) Does most of that tax fall on consumers, or suppliers? c) At the new equilibrium, will consumers spend more, less or the same as before on cigarettes? d) How much tax revenue will the government receive? e) Will suppliers earn more, less or the same amount? f) What is the consumer surplus and producer surplus now? g) Calculate the dead weight loss caused by the tax....
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This note was uploaded on 04/04/2012 for the course ECON 010 taught by Professor Stein during the Fall '07 term at UPenn.
- Fall '07