1. Each year, approximately 14 billion packs of cigarettes are sold in the U.S. In addition, studies have found the price elasticity of demand for cigarettes is -0.4.

a. If the Federal government imposes a $1 per pack excise tax on cigarettes, how many packs of cigarettes would be sold in the U.S., assuming the average price of a pack of cigarettes before the tax increase was $5?

b. Is raising cigarette taxes an effective way to reduce cigarette consumption based on your answer in (a)?

c. What else can the government do to reduce cigarette smoking in the U.S. beyond raising taxes?