1 Read the news article in Reading Between the Lines on p. 92 about the French cigarette taxes and then: a Using the numbers in the table below, calculate the price elasticity of demand for cigarettes in France for the years 2003 to 2004. Use the method shown on p. 79. b Explain what your calculated value for price elasticity from part a above means. c Do you think the revenue collected from the tobacco tax in France during 2004 will rise or fall compared to 2003? Explain your answer. d What will happen to French cigarette tax revenue if many people go to Spain or Luxembourg to buy their cigarettes in 2004? e Why did tobacconists in France complain about the increase in cigarette tax?

Tax Price Quantity (percentage (euros (billions Year of price) per pack) of packs) 2003 76.0 3.89 173.7 2004 79.0 5.00 155.5