Assume the supply curve for cigars is a typical, upward-sloping straight line, and the demand curve for cigars is a typical, downward-sloping straight line. suppose the equilibrium quantity in the market for cigars is 1,000 per month when there is no tax. then a tax of $0.50 per cigar is imposed. the effective price paid by buyers increases from $1.50 to $1.90 and the effective price received by sellers falls from $1.50 to $1.40. the government's tax revenue amounts to $475 per month. which of the following statements is correct?
a. the deadweight loss of the tax is $12.50.
b. the demand for cigars is less elastic than the supply of cigars.
c. the tax causes a decrease in consumer surplus of $390 and a decrease in producer surplus of $97.50.
d. all of the above are correct.