Suppose That You Have Estimated That Demand for Cigarettes Among

question 107

Multiple Choice

Suppose that you have estimated that demand for cigarettes among adults is different from the demand for cigarettes among teenagers.The demand curves that you have estimated are shown below:
Suppose the current price for a pack of cigarettes is $3.00.A $1.00 per pack tax on cigarettes has been proposed.
The ____ will bear the greatest burden of the tax in the adult market and the ____ will bear the greatest burden of the tax in the teenage market.

• A) buyers;sellers
• B) government;sellers
• C) buyers;government
• D) sellers;buyers

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Definitions:

Government Regulation

Government regulation encompasses the laws and rules set forth by the government intended to control or manage certain practices, activities, or behaviors within an economy or society.

Entry Barriers

These are obstacles that prevent or hinder new competitors from easily entering an industry or area of business.

Government Failure

Situations where government interventions in the economy cause more inefficiency and problems than they solve.

Competitive Markets

Markets in which there are many buyers and sellers so that each has a negligible impact on the market price.