The US Imposes Substantial Taxes on Cigarettes but Not on Loose

question 61

Multiple Choice

The U.S. imposes substantial taxes on cigarettes but not on loose tobacco. When the tax on cigarettes went into effect, the demand for home cigarette rolling machines most likely:

• A) decreased, causing the price of cigarette rolling machines to fall and the quantity of machines purchased to fall.
• B) decreased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to fall.
• C) increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to rise.
• D) increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to fall.

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