reduction in the quantity of cigarettes that adults smoke, so the elasticity of demand for cigarettes is 0.3. If

society increases taxes on companies that produce cigarettes, the result will be, as in Figure 5.9 (a), that the
supply curve shifts from S0 to S1. However, as the equilibrium moves from E0 to E1, governments mainly pass
along these taxes to consumers in the form of higher prices. These higher taxes on cigarettes will raise tax

revenue for the government, but they will not much affect the quantity of smoking.

If the goal is to reduce the quantity of cigarettes demanded, we must achieve it by shifting this inelastic

demand back to the left, perhaps with public programs to discourage cigarette use or to help people to quit. For
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