Suppose the Market Demand for Cigarettes Is: D=10- P, and the Supply

question 14

Multiple Choice

Suppose the market demand for cigarettes is: D=10- P, and the supply of cigarettes is: S=- 2+P, where P is the price per pack of cigarettes. If the government imposes a cigarette tax of $1 per pack, the price paid by consumers is larger than the price faced by suppliers.

• A)$6.5.
• B)$5.
• C)$1.
• D)$6.

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Definitions:

Tree Diagram

A diagram used to show the total number of possible outcomes in a probability experiment.

Simple Events

A simple event is an outcome or event that cannot be further broken down into simpler components within the context of a probability experiment.

Experiment

A carefully controlled procedure undertaken to discover, test, or demonstrate a hypothesis or the effects of one variable on another.

Sample Space

The set of all possible outcomes of a probability experiment.