What Would Be the Welfare Effect of a Per-Unit Tax

question 31

Essay

What would be the welfare effect of a per-unit tax in the following markets?
(
A)The market for cigarettes

• A)The market for cigarettes

---

Definitions:

Accommodation Surety

A third party who guarantees the debt or obligation of another without benefit to themselves, often to help the borrower obtain a loan.

Guarantor

An individual or entity that agrees to be responsible for another's debt or performance under a contract if the primary party does not meet their obligations.

Guaranty Contract

A legal agreement where a guarantor agrees to fulfill the financial obligations of a debtor to a lender, in case the debtor fails to do so.

Suretyship Contract

An agreement whereby a party (surety) guarantees the performance of an obligation by another party (principal) to a third party (obligee).