Question

The 2019 demand and supply equations for cigarettes in Pottsville are as follows: P = $ 300 - Q. 16+ P = $ 60 + 2Qs where Q. 16+ is the quantity of cigarettes demanded by those 16 and above and Q. Can is the quantity supplied by domestic firms. To discourage young people from smoking Pottsville in 2020 will increase the legal age to 19. The demand by 16, 17 and 18 year olds is given by AP P = 260 -20.16,17,18 (10) What are the economic effects of this new law.? Qty Original price Original output New price in 2020 New output in 2020 Consumption by those 19and over after the increase in legal age Original consumption by those 16,17 and 18 Original consumption by those 19 and above

Answer 1

Solution : originally P= 300 - Q'67 P= 60 + 2a briun 16+ 300 - 300-Q 60 + 2a → 32= 240 →Q = 240 - 80 PE 300 - 80 - $220 when legal age is increased to 19 yrs of age then Q18+ = a[6+ - Q16,17213 = 300 -P - 130 + 0.5p Q18+ - 170 -0.5P → P = 340- q18+ and supply curve is p = 60+ 20 At equilibrium after increase of legal age, 340-Q = 60+22 → 3Q=280 → a= 280 . and Price = 60+2x280 = 740 Original consumption by those 16,194 18 P = 260-2016,17,18 220 = 260 - 2016,17,18 26,17,18 40 anos 20 original consumption by those 19e above = 80-20 = 60 Ah 3 16,17,18