The price elasticity of demand for e-cigarettes is estimated to be -0.8 (remember sometimes we forget about the sign for the price elasticity of demand because it's always negative).

The cross price elasticity of demand between e-cigarettes and traditional cigarettes is about 1.

1. Interpret the price elasticity of demand for e-cigarettes by answering the following. If the price of e-cigarettes rises by 1%, by how much with the quantity demanded change?
2. Are e-cigarettes and traditional cigarettes complements or substitutes? How can you tell?
3. Suppose that Indiana restricts the purchases of e-cigarettes, causing the price of e-cigarettes to rise. What would you expect to happen to the consumption of traditional cigarettes?