Join Date: Mar 2005
Posts: 12,998
Suppose that the pretax price of cigarettes is $3/pack and the posttax price of cigareettes is $4/pack.
The tax is $1.50/pack and is paid by the retailers of cigarettes to the government.
600 packs were sold prior to the tax increase and 500 packs were sold after.
What's the consumer's excess burden?
1) 75 packs
2) 100 packs
3) 150 packs
4) 175 packs