Dual Shifts in Cigarette Market from Tax and Health Campaign

Steps:

• Specific tax on supply raises producers' costs, shifting supply curve leftward.
• Health campaign reduces smokers' willingness to pay, shifting demand curve leftward.
• Both leftward shifts result in higher equilibrium price and lower quantity.
• Diagram C depicts both supply and demand shifting left.

Why C is correct:

• Per microeconomic law of supply and demand, a per-unit tax shifts supply left by the tax amount, while reduced preferences from information campaigns shift demand left, matching C's dual inward shifts.

Why the others are wrong:

• A shows only supply shift left (ignores demand effect).
• B shows only demand shift left (ignores tax on supply).
• D shows outward shifts (opposite of restrictive policy effects).

Final answer: C