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Price Point Impact. Even with a linear demand curve, price elasticity for any product. (including tobacco) varies as the price for that product varies. De-. mand tends to be relatively inelastic at lower price levels (due to. smaller income effects), but grows more elastic as price increases.
An increase in the price will reduce consumer surplus, while a decrease in the price will increase consumer surplus. Below are two scenarios that illustrate how changes in price can affect consumers' surplus. It is important to note that any shift from the good's pareto optimal price will result in a decrease in the total economic surplus. The total economic surplus equals the sum of the consumer and producer surpluses.