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Excise tax rates on tobacco and tobacco products increase in March and September based on average
weekly ordinary time earnings. Perform a web-search to determine the amount of excise tax charged (as
at 1 January 2018) on a standard 20 packet of cigarettes. If the standard packet is sold for a price of $30,
how much is the before tax price?
Illustrate using the demand and supply model, the effects of a tax imposed on sellers of tobacco
products. Explain in detail who pays the tax (buyers and/or sellers) and discuss the role the price
elasticity of demand plays in determining the impact on prices and quantity of tobacco products sold. Be
explicit about any assumptions made in developing predictions.
400 words
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