Question A friend of mine is wondering why government

31 May Question A friend of mine is wondering why government

Posted at 16:49h in Essay Writing Services by Past Papers

Question

A friend of mine is wondering why government hasn’t imposed a tax on cigarettes to

discourage consumption of cigarettes because in her estimation imposing a tax on cigarettes

would have the effect of increasing the price of cigarettes and therefore discourage smoking of

cigarettes.

Briefly explain to me using the concept of elasticity why a government tax on

cigarettes would be ineffective in reducing consumption of cigarettes but rather will give

government more revenue.

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