Return to the Market for Cigarettes from the Previous Questions

question 18

Multiple Choice

Return to the market for cigarettes from the previous questions.Suppose the government implements the tax you found in the previous question.But suppose the government is making a mistake.The true demand curve is in fact ,and this is not a result of any behavioral bias.Compute the deadweight loss of the government's tax policy.

• A) DWL = 0.
• B) DWL = 500.
• C) DWL = 1,000
• D) DWL = 2,500.

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Definitions:

Lab Experiments

Controlled experiments carried out in a laboratory setting to investigate relationships between variables.

Scientist's Objectivity

The principle of conducting research and experimentation without bias, personal or otherwise, aiming for unprejudiced findings based solely on facts and evidence.

Mathematicians

Individuals specialized in the study of mathematics, involving the investigation of number theory, geometry, algebra, and calculus.

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Scientists who specialize in the study of matter, energy, and the interactions between them.