Problem
Assume there is a single firm producing cigarettes, and the marginal cost of producing cigarettes is a constant. Suppose the government imposes a 10-cent tax on each pack of cigarettes. If the demand curve for cigarettes is linear (that is, Q = a - bp, where Q = output, p = price, and a and b are constants), will the price rise by more or by less than the tax?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.