Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices (or income).

This is especially important for policy, where the effectiveness of a tax depends, in part, on the elasticity of demand. We see this, for example, in the issue of "sin-taxes", which are taxes on goods that have harmful effects, like sugar-sweetened beverages or cigarettes.

Revenue from these taxes could potentially be used to reduce a budget deficit or to target spending for reducing public health costs associated with, say obesity or lung cancer. Explain the relationship between the elasticity of demand, the magnitude of consumer response, and the amount of revenue collected by the tax.

Elasticity for goods for which people develop a habit and desire is highly inelastic or less elastic and in such a case the demand will be less responsive towards change in prices.

For harmful products as explained in the question the elasticity of demand is less responsive towards change in price and further the government implement taxes on it so that government can generate revenue and can earn a good amount on it which can be further used for meeting government expenditure on public health cost etc since due to increase taxes consumers demand will not be hampered government can levy taxes on it and can earn higher revenue.

For normal goods elasticity is very high which shows demand responsiveness is high to change in prices , this shows that as price increases due to tax consumer will demand less and hence the amount of revenue collected from tax falls down.

From the above explaination it can be understood that relationship between elasticity, consumption and revenue collected from tax all depends upon the type of goods and tax levied on it.....