consider the market for cigarettes

a) Draw an initial demand and supply equilibrium for the market for cigarettes using the realistic example about the price elasticity of demand for cigarettes. Label this point A.

b) Now suppose that Health Canada started a campaign to make people aware of the dangers of smoking. Using the diagram in part a) show and explain (using 3 steps), what happens to quantity and price of cigarettes as a result. Label the new equilibrium as B.

c) Cigarettes are also heavily taxed. Show and explain the effect on price and quantity of cigarettes consumed if a tax is imposed along with the Health Canada campaign. Who will bear the most burden of tax- consumers or producers of cigarettes? Why? [Hint: You have to apply the tax from the equilibrium point B in part b]