does the elasticity of demand for cigarettebased products sh

does the elasticity of demand for cigarette-based products showing inelastic demand (or minimal price sensitivity) a key factor in strategies used in tax policy?

Solution

since cigarettes have an inelastic demand, any tax imposed on cigarettes will result in a very small change in demand. As a result of which tax revenue generated from such a tax will be quite large and consistent. Also, only the buys of cigarettes will bear the burden and the sellers as the higher incidence of taxation is a result of greater elasticity.