Suppose the market for cigarettes is characterized by the following information: Qd=70–5P [Demand] Qs=3P–10 [Supply]
[Note: P = price per unit; Qd = thousands of units demanded; Qs = thousands of units supplied] Suppose the government imposes a sales tax of $2 per unit. Answer questions (i) through (v) below:
i) Calculate the magnitude of the consumer surplus and producer surplus in the pre-tax equilibrium.
ii) Calculate the tax revenue in the post-tax equilibrium.
iii) Calculate the change in consumer surplus due to the sales tax.
iv) Calculate the change in producer surplus due to the sales tax.
v) Calculate the Dead-Weight-Loss due to the sales tax.