Questions on taxation

Question

The following figures relate to the demand and supply of cigarettes:

Price £	Q demanded (m)	Q supplied (m)
7.00	600	1500
6.50	650	1400
6.00	700	1300
5.50	750	1200
5.00	800	1100
4.50	850	1000
4.00	900	900
3.50	950	800
3.00	1000	700

1. Plot the demand and supply curves and show equilibrium price and quantity.

2. The government decides to impose a tax on cigarettes of £2.00 per pack.  Plot a new supply curve, and show the effect of this tax on:

The price of cigarettes and, the amount of cigarettes consumed.

From your graph estimate the incidence (burden) of tax on the consumer and producer.