To find answers to these questions, we need to understand the concept of elasticity. Elasticity is an economics

concept that measures responsiveness of one variable to changes in another variable. Suppose you drop two

items from a second-floor balcony. The first item is a tennis ball. The second item is a brick. Which will bounce

higher? Obviously, the tennis ball. We would say that the tennis ball has greater elasticity.

Consider an economic example. Cigarette taxes are an example of a “sin tax,” a tax on something that is bad for

you, like alcohol. Governments tax cigarettes at the state and national levels. As of 2021, state taxes ranged

from a low of 17 cents per pack in Missouri to $4.35 per pack in Connecticut and New York. The average state

cigarette tax is $1.76 per pack. The 2021 federal tax rate on cigarettes was $1.01 per pack. In 2015, the Obama

Administration proposed raising the federal tax nearly a dollar to $1.95 per pack. The key question is: How
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