The Inverse Demand Function for Cigars Is Defined by P

question 4

Multiple Choice

The inverse demand function for cigars is defined by p = 240 - 2q, and the inverse supply function is defined by p = 3 + q.Cigars are taxed at $4 per box.

• A)The after-tax price paid by consumers rises by more than $2, and the after-tax price received by suppliers falls by less than $2.
• B)The after-tax price paid by consumers goes up by less than $2, and the after-tax price received by suppliers rises.
• C)Consumers and suppliers share the cost of the tax equally.
• D)The after-tax price paid by consumers rises by $4, and the after-tax price received by suppliers stays constant.
• E)The after-tax price paid by consumers rises by less than $2, and the after-tax price received by suppliers stays constant.

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