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Business, 28.03.2020 00:21 hmccush8

Assume the government receives more tax revenue when it raises taxes on cigarettes as part of the price of cigarettes. However, after five years, the government discovers that revenues from the cigarette tax have declined. This situation would be most likely to occur if

1) the demand for gasoline was perfectly inelastic in both the short run and the long run.
2) the demand for cigarettes was inelastic in the short run, but elastic in the long run.
3) the long-run elasticity of supply was much greater than the long-run elasticity of demand.
4) the long-run elasticity of demand was greater than the long-run elasticity of supply.

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