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Question: the new york state cigarette tax applies equally to lowquality...

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The New York state cigarette tax applies equally to low-quality (generic) and high-quality cigarettes. However, the state cannot collect the tax on sales on Indian reservations. DeCicca et al. (2014) found that people purchase a larger share of low-quality cigarettes on Indian reservations compared to purchases elsewhere in New York. Why? People purchase a larger share of low-quality cigarettes on Indian reservations (compared to purchases elsewhere in New York) because A. low-quality cigarettes are relatively cheaper there without state cigarette taxes. O B. low-quality cigarettes are inferior goods. C, low-quality cigarettes are more likely to be substitutable for high-quality cigarettes there. D. consumers have relatively more purchasing power on Indian reservations. E. consumers have less income on Indian reservations. Let the price of low-quality cigarettes be p1,the price of high-quality cigarettes be p2, and the per-pack cigarette tax be t. As a function of p1. P2, and t, the ratio of the price of low-quality cigarettes to high-quality cigarettes on Indian reservations is and the ratio of the price of low-quality cigarettes to high-quality cigarettes off reservations with taxes is

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