Define why the government imposes a sales tax

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Reference no: EM13201566

Suppose the market for cigarettes is characterized by the following information:
Qd = 70 - 5P [Demand] Qs = 3P - 10 [Supply]
Suppose the government imposes a sales tax of $2 per unit.
Calculate the magnitude of the consumer surplus and producer surplus in the pre-tax equilibrium.
[Note: P = price per unit; Qd = thousands of units demanded; Qs = thousands of units supplied]

Reference no: EM13201566

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