Many States Have Minimum Price Laws for Cigarettes

question 50

Essay

Many states have minimum price laws for cigarettes. Assume that the demand equation for cigarettes is Q^D = 4,000 - 300P, while the supply equation is Q^S = -1,000 + 200P, with quantity in thousands of packs. Assume that state governments replace the $12 price floors with a tax of $5 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 $5 tax would lead to a deadweight loss of $_____.

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Definitions:

Circadian Rhythms

Biological processes that follow an approximately 24-hour cycle, affecting sleep, behavior, and physiological processes in living organisms.

Melatonin

A hormone produced by the pineal gland that regulates sleep and wake cycles, often used as a supplement to treat sleep disorders.

Delayed Sleep Phase Type

A condition where an individual's sleep is delayed by two or more hours beyond the conventional bedtime, leading to difficulty in waking up at a desired time.

Nightmare Disorder

Sleep disorder characterized by nightmares frequent enough to cause significant distress or impairment in functioning.