The table below provides some estimates of elasticities studied in this course. Use them to answer the questions that follow.

Type of ElasticityEstimatePrice elasticity of demand for cigarettes-0.25

Price elasticity of supply for cigarettes0.90

Income elasticity of demand for cigarettes-0.2

Cross-price elasticity of demand for cigarettes and alcohol0.30

Suppose that a tax is imposed on cigarettes, which of the following is true

a.The tax would be split between consumers and producers, but consumers would pay the majority of the tax

b.The entire tax would be paid by consumers

c.The entire tax would be paid by producers

d.The tax would be split between consumers and producers, but producers would pay the majority of the tax

Suppose that the price of cigarettes was raised by 10%, we would expect

a.Quantity demanded to fall by 25%

b.Quantity demanded to fall by 40%

c.Quantity demanded to fall by 12.5%

d.Quantity demanded to fall by 2.5%

Suppose that the price of cigarettes was increased, what would be the effect on total revenue of cigarette producers?

a.They would be unchanged

b.They would rise

c.They would fall

d.It is ambiguous