Pr U to Fr Br Fr of fa ww di 15 Nunavut Sees Tobacco Sales Decline One Year After New Tax In March 2017, the Nunavut government hiked the cost of a pack of cigarettes by one dollar. Sales of cigarettes declined two percent and the government collected an extra $3 million in revenue. Source: cbc.ca, April 15, 2018 Prior to the new tax, consumers in Nunavut paid $11.70 for a pack of cigarettes

a. How does the Nunavut market for cigarettes respond to the tax increase?

b. What does the news clip tell you about the price elasticity of demand for cigarettes?

c. Why does a rise in the cigarette tax bring an increase in tax revenue? Production Quotas and Subsidies Use the following news clip to work Problems