Suppose that the supply curve for cigarettes is a horizontal line at $2 per pack. Suppose that 1000 packs are sold at this price. Further suppose that the price elasticity of demand is 2. If the government imposes a 50 cent tax per pack, what effect will this have on the quantity sold?

a. The price will have increased by 50 %

b. Demand for the packs will fall by 25 %

c. Demand will stay unchanged because the suppliers will bear the burden

d. Demand will have fallen by 50 %.