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Market Equilibrium: Effect of Excise Tax

APMICR-E8VLJK

The table below represents the market for cigarettes.

Q Demanded Price Q Supplied
1000 \$2 100
900 \$4 200
700 \$6 400
500 \$8 500
400 \$10 600



If the government imposes a \$4 per-unit excise tax on the production of each pack ​of cigarettes to help pay for the significant healthcare costs associated with tobacco, what will the new market equilibrium price and quantity be?

A

$2 and 1000

B

$4 and 200

C

$6 and 400

D

$8 and 500

E

$10 and 400