its price. This increase in price leads to fall in quantity demanded of cigarette. As explained, a $1 per pack tax has been levyr 011 the cigarettes further translates to an additional tax liability of $500 to person smoking 500 packs of cigarettes per year Moreover, the government is providing a tax cut of $500 as well. However, on the contrary this tax cut of $500 will increase the purchasing power of person as a whole. The increased purchasing power will be directed to wide range of commodities that this person can consume other than cigarettes. That said, the tax increase will have an impact on a specific individual consumer