econ question...plz help

2010-05-18 7:07 am

回答 (1)

2010-05-19 5:13 am
✔ 最佳答案
a. as only 10 percent increase in price (by taxes) for any people, it is regressive tax, therefore, it has lower effect on wealthier people than poor people.

that means the the demand shifts in a smaller extant in ' wealthier people ' diagram

b. those remaining smokers have a lot of other factors to consider, increase in pricee in cigarettes will not have immediate effect on those people, such less money left for spening on other activities, less money will make not have lower percuniary gain or non-percuniary gain, such factors will defer them to quit immediately

c. as tax is only imposed on one brand, so there is a lot of choices for smokers to choose, when increase in price in particular brand of cigarette, smokers can shift to other brands having lower price, the price elasticity of demand will certaninly be higher

d. Price increases by $1
quantity consumed decreases by 0.04 (rich), 0.08 (poor)
spending will increase by (11x1x0.96+11x1x0.92)-(10x1+10x1) = 0.68


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