1. Assuming tobacco is sold in a purely competitive market, use a well-labelled demand and supply diagram model to explain how market equilibrium price and quantity for tobacco are determined. Clearly explain the equilibrating process. (4 marks) 2. Use demand and supply model to describe the impact on equilibrium quantity and price in the market for tobacco, ceteris paribus, stemming from the increase in the sales tax. Explain the equilibrating process. (5 marks) 3. (a) Is the demand for tobacco like to be elastic or inelastic? Justify your answer. (3 marks) (b) Given your answer in part (a), use the demand and supply model to explain the incidence of sales tax and discuss who are likely to be the winners and losers associated with the introduction of the new tax? (5 marks) 4. What other policies could the government implement to discourage smoking apart from raising taxes? Use the demand and supply model to show the impact of alternative policies, and identify who are the likely winners and losers