More elastic than estimated by the legislative office. 0 Assuming that the price of a pack of cigarettes is $5 before the tax and if the actual price elasticity of demand for Californiataxed cigarettes is 0.8, c. how much will the quantity demanded decrease with the new tax? 27.3 9 percent d. how much additional revenue will the state take in? $ 1.2 obmion Refer to the Front Page article to answer four questions. FRONT PAGE Californians Vote to Triple Cigarette Tax Sacramento, CACalifornians voted to more than triple the state tax on cigarettes from $0.87 a pack to $2.87 a pack, beginning April 1, 201 T. Anti-smoking groups say the higher price will reduce smoking in the state. They foresee the proportion of smokers falling from the current 11.6 percent of the population to as low as 7.1 percent by 2020. The state treasurer is also applauding the higher price, but for different reasons. According to the state's Legislature Analyst's Ofce (LAO), the additional $2 per pack tax will bring in $1 .27$1.61 billion a year to the state treasury. Both groups were wrong. Californians continued to smoke about 800 million cigarettes a year, disappointing health advocates. And the state netted much less than $1 billion in new tax revenue, disappointing the state treasurer. These disappointments are due to the fact that Californians can easily purchase cheaper cigarettes in neighboring states, on Indian reservations, and from smuggled supplies. Source: News reports, November 10, 2016