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Many States Have Minimum Price Laws for Cigarettes

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Many states have minimum price laws for cigarettes. Assume that the demand equation for cigarettes is QD = 4,000 - 300P, while the supply equation is QS = -1,000 + 200P, with quantity in thousands of packs. Assume that state governments replace the $12 price floors with a tax of $9 per pack, resulting in the same number of packs sold as under the price floor. The price floor would lead to a deadweight loss of $_____; the $9 tax would lead to a deadweight loss of $_____.


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