Business, 11.03.2020 02:38 wolfgirl4762

Suppose that the U. S. government determines that cigarette smoking creates social costs not reflected in the current market price and equilibrium quantity of cigarettes. A study has recommended that the government can correct the externality effect of cigarette consumption by paying farmers not to plant tobacco used to manufacture cigarettes. It also recommends raising the funds to make these payments by increasing taxes on cigarettes. These actions by the government lead to all the following outcomes, except:
a. a reduction in the negative externality caused by cigarette smoking.
b. an increase in the negative externality caused by cigarette smoking.
c. a leftward shift of the supply curve of cigarettes.
d. a leftward shift of the supply curve of tobacco.

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Suppose that the U. S. government determines that cigarette smoking creates social costs not reflect...

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