2. (Topic 3) Comparing price floor and tax: The government is considering a floor price on cigarettes, in a bid to reduce consumption. d. *With the help of a diagram, outline the changes in consumer and producer surplus as a result of this price floor. Is this market efficient? **Compare and contrast the effects of this price floor, versus if the government decided to impose a tax instead [assume the new quantities traded would be the same under either scenario]. ***(Extending to Topic 4) Now consider whether demand for cigarettes is relatively price elastic or relatively inelastic. How does this affect your analysis? Specifically, how does the price elasticity of demand for cigarettes affect the consequences of implementing a tax on cigarettes