The reason cigarette taxes raise a lot of money and don't reduce adult smoking much is because demand for cigarettes by adults is

Question

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The fact that cigarette taxes raise a lot of money despite not reducing adult smoking much suggests that the demand for cigarettes by adults is very inelastic. If the demand curve for cigarettes was highly elastic, then a tax increase would significantly reduce the quantity demanded and hence government revenue. A unit elastic demand curve would imply that a tax increase would reduce consumption and government revenue by an equal percentage. An upward sloping demand curve would suggest that higher prices lead to greater demand, which is not the case for cigarettes.

The Reason Cigarette Taxes Raise a Lot of Money and Don't