Theoretically, when the government imposed the tax on cigarettes, the supply curve will shift to the left which will also cause a decrease in demand. The burden of the tax will eventually be shared between the buyers and the sellers. However, as cigarette is a highly addictive goods, its demand is inelastic and therefore buyers bear more of the tax. (Octaviano, 2013) In this situation, either the sellers or the buyers won’t be affected significantly. Both buyers and sellers do pay certain amount of taxes but since the demand of cigarette is inelastic, there will be a relatively small change of the cigarettes demanded. However, the demand of the cigarette is inelastic only between some ranges of prices. In a situation where the government taxes
