The market supply of cigarettes is shown in the table below.
Supply of Cigarettes
Quantity of Cigarettes Supplied (packs)
Price (dollars) Pre-Tax Post-Tax
$1.00 100
1.50 150
2.00 200
2.50 250
3.00 300
Imagine that, in order to discourage people from smoking, the government decides to place an excise tax on every pack of cigarettes sold directly affecting suppliers. As a result of the tax, the supply of cigarettes decreases by 150 packs of cigarettes at each price.
Graph the pre-tax market supply curve and graph the after-tax market supply curve.
2. Managers at a local home improvement store see that new home sales in their area have increased. They order more refrigerators for their store. They likely do this because they assume that:
a. new homes and refrigerators are complements
b. new homes and refrigerators are substitutes
c. refrigerators are inferior goods
d. refrigerators are normal goods