The U.S. government administers two programsthat affect the market for cigarettes.Media

Chapter 6, Problem 9

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The U.S. government administers two programsthat affect the market for cigarettes.Media campaigns and labeling requirementsare aimed at making the public aware of thedangers of cigarette smoking. At the sametime, the Department of Agriculture maintainsa price-support program for tobacco farmers,which raises the price of tobacco above theequili brium price.a. How do these two programs affect cigaretteconsumption? Use a graph of the cigarettemarket in your answer.b. What is the combined effect of these twoprograms on the price of cigarettes?c. Cigarettes are also heavily taxed. What effectdoes this tax have on cigarette consumption?

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