In the short run the demand for cigarettes is totally inelastic. In the long run, suppose that it is perfectly elastic. What is the impact of a cigarette tax on the price that consumers pay in the short run and in the long run?
Added by Gabriel B.
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This means that consumers will continue to purchase the same quantity of cigarettes even if the price increases due to a tax. As a result, the price that consumers pay will increase in the short run. ** Show more…
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