Equilibrium price of cigarettes


Suppose that the demand for cigarettes is perfectly inelastic, whereas the elasticity of supply is one. The equilibrium price is $1 a packet and the equilibrium quantity is 1000 packets a week. Then the government imposes a tax of $0.20 per pack. The new equilibrium price will be

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Microeconomics: Equilibrium price of cigarettes
Reference No:- TGS061274

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