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pper Slobbovians smoke 10 million cigarettes per year, so do Lower Slobbovians. To discourage smoking, each country imposes an excise tax of 50¢ per pack. As a result, the price of cigarettes rises by 35c per pack in Upper Slobbovia, but by only 15c per pack in Lower Slobbovia. True or False: The Upper Slobbovian excise tax discourages smoking more effectively (that is, it leads to a bigger decrease in
smoking) than the Lower Slobbovian excise tax. (Answer assuming that the supply curves for cigarettes are identical in both countries.) Justify your answer.
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