Question: part c and d I'm not sure how to do 4. The U.S. government has decided to limit the sale of cigarettes due to their

part c and d I'm not sure how to do

part c and d I'm not sure how to do 4. The

4. The U.S. government has decided to limit the sale of cigarettes due to their negative health impacts. The demand curve for cigarettes is QD = 20- 2P and the supply curve for cigarettes is given by Qs = 4P -10. Quantity demanded and supplied are both measured in terms of thousands of packs per day. Price is per pack. a. Graph the supply and demand curves and find the equilibrium price and quantity in the market. b. Now suppose the government limits the sales of cigarettes to 6, 000 packs in an effort to stop smoking. What is the new price in this market? c. How have consumer and producer surplus changed as a result of the quota (limiting sales)? What is the deadweight loss? d. If the government decided to impose a tax on producers for each pack of cigarettes sold instead of a quota, approximately what size tax would reduce equilibrium quantity in the market to 6,000? What are the advantages and disadvantages of a tax versus a quota? Explain

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