Voters in Oregon will decide in November 2020 on a $2-per-pack tax increase on cigarettes, which would raise the per-pack tax to $3.33. Should the tax be implemented, it is expected to raise nearly $350 million every two years, with the revenue going to the state's public health care system. Oregon voters last considered an increase in cigarette taxes in 2007, but that measure was defeated thanks in part to a $12 million campaign against the tax hike by tobacco companies. Proponents of this $2-per-pack tax increase believe the tax has a better chance of passing this time because it has support from the health care industry.
Source: Dirk VanderHart, "Once Stalled, A Cigarette Tax Hike Is Moving In Oregon Capital", opb.org, June 13, 2019
-Refer to the Article Summary. The additional tax of $2 per pack of cigarettes will have which of the following effects on the market for cigarettes in Oregon?

Question

Voters in Oregon will decide in November 2020 on a $2-per-pack tax increase on cigarettes, which would raise the per-pack tax to $3.33. Should the tax be implemented, it is expected to raise nearly $350 million every two years, with the revenue going to the state's public health care system. Oregon voters last considered an increase in cigarette taxes in 2007, but that measure was defeated thanks in part to a $12 million campaign against the tax hike by tobacco companies. Proponents of this $2-per-pack tax increase believe the tax has a better chance of passing this time because it has support from the health care industry. 
Source: Dirk VanderHart, "Once Stalled, A Cigarette Tax Hike Is Moving In Oregon Capital", opb.org, June 13, 2019
-Refer to the Article Summary. The additional tax of $2 per pack of cigarettes will have which of the following effects on the market for cigarettes in Oregon?

Quizplus · Accepted Answer

Deadweight loss in a market increases when a tax is imposed because the tax creates a wedge between what consumers pay and what producers receive, leading to a reduction in the quantity traded compared to the equilibrium quantity without the tax. This results in lost gains from trade, or deadweight loss.

Voters in Oregon Will Decide in November 2020 on a $2-Per-Pack