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$150.00 Price elasticity of demand and supply

Found in Economics: General-Economics
Chapter 8, # 6

Q:

Alaska might increase tax on cigars from 50 cents to $1.50

PE demand is -.6 (.6 absolute value :))
PE supply is 4

Normal market forces determine price and output quantities.

10 million cigars sold yearly.

Long term - is the tax increase a good idea.
What is the long term impact of the increase on Alaskan tax revenue and consumer/producer surplus.

 

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