Return to the Market for Cigarettes from the Previous Questions

question 22

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.

---

Definitions:

Olive

A small, oval-shaped fruit that is typically green, black, or purple and is commonly used for oil or as a food item.

Apple

denotes a widely consumed fruit from the apple tree (Malus domestica), known for its sweet taste and nutritious benefits.

Recognition Heuristic

A strategy in which decision making stops as soon as a factor that moves one toward a decision has been recognized.

Solve a Problem

The process of finding solutions or answers to a question or obstacle, often involving critical thinking, analysis, and the application of specific strategies or techniques.