The government plans to tax cigarettes to raise money for health-care benefits, and demand for cigarettes is price inelastic. Which statement is true?

1. A Option A: No tax revenue can be raised in this way because sellers will just lower their price by the amount of the tax, so the price to consumers will not change
2. B Option B: This is a very good way to raise revenue in both the short term and the long term, because there are no substitutes for cigarettes
3. C Option C: This tax will not raise much revenue in either the short term or the long term since demand is price inelastic
4. D Option D: The tax may not raise as much revenue as anticipated in the years to come because the demand for cigarettes is likely to become more elastic over time

Answer checked 11 October 2026 · How we write and check questions