The current administration and government are forced to tax goods because they lack the

resources to switch to a better system. They are forced to consider these elasticities when

determining taxes and how to distribute subsidies for goods that are otherwise unprofitable to

produce and whose import is prohibited. Although neither of these actions is desirable, the

product's taxation depends on that nation's political view and whether the product is necessary

and profitable to it.

The government imposes a high tax on tobacco goods to generate income and advance

the societal objective of preventing smoking. Each state levies a tax on tobacco goods due to the

government's desire to raise money randomly or its desire to combat cancer. The volume of

tobacco products, regardless of whether a cigarette, chewing, pipe, cigar, or snuff, determines the

federal excise of taxation duty on tobacco products.

This question implies numerous presumptions concerning the type of government in

place. In an ideal future government, there would be no need for subsidies, and taxes would be

based on how much natural resources, like land value, are used.

Products containing tobacco would mainly experience inelastic demand since rising

nicotine demand would lead customers to pay more if necessary. Due to an inelastic demand,

where quantity supplied is not affected but the change in revenue is enormous due to a rise in

costs, their revenue will decrease by more than the quantity supplied for two reasons. First, and

most importantly, they face an increase in costs that may be partially offset by a decline in factor

prices for labor and capital due to industry contraction.

The government will receive a more significant portion of the proceeds from the tobacco

industry as per unit tax because the unit output wouldn't drop, and supply would be reduced by a
more considerable margin than previously due to losses. Therefore, the unit tax was more

effective than a single sum in government revenue collection.