Question 3 [20 marks in total] a. Price elasticity of demand for eigarettes is -0.4. If the government wants to reduce smoking by 16%6, by what pereentage should it raise the price of cigarettes? Explain briefly, [10 marke) b. The following diagram shows two demand curves that cross at price level P0. "Demand is more inelastic (between P0 and P1 ) along curve D2 than along curve D1 ". Is this statemen true? Explain briefly. [10 marks]