According to a study by the U.S. Centers for Disease Control and Prevention, the price elasticity of demand for cigarettes is -0.25. Americans purchase about 360 billion cigarettes each year.

a. If the federal tax on cigarettes were increased enough to cause a 50 percent increase in the price of cigarettes, what would be the effect on the quantity of cigarettes demanded?

b. A recent study by Henry Saffer of City University of New York and colleagues estimated that the price elasticity of demand for electronic cigarettes (e-cigarettes) is -1.27. Why might the price elasticity of demand be higher for e-cigarettes than for conventional cigarettes? Is a tax increase of the same percentage more likely to reduce smoking of conventional cigarettes or of e-cigarettes Briefly explain.