When the price of an item rises, fewer of the items are sold. The rate at which the sales of an item declines is called elasticity of demand. The greater the decline, the greater the elasticity.

Products will vary greatly in their elasticity. Necessary products like fuel and medicine tend to be less elastic. This is because they are quite vital to the running of the economy. Though an increase in fuel prices will decrease its use, it will not make it fall as rapidly as the rise in cost of a leisure product, for example, the price of lawn gnomes. -- Indepthinfo.com

•The number of close substitutes for a good / uniqueness of the product – the more close substitutes in the market, the more elastic is the demand for a product because consumers can more easily switch their demand if the price of one product changes relative to others in the market. -- Tutor2U.com Price Elasticity of Demand

From Eric Dondero:

It's a well-known principle of free market economics - Henry Hazlitt, Frederich Hayek, Milton Friedman - that when Price goes up due to factors such as increased taxation, consumers will seek "replacement" goods.

A strong tradition has developed in Washington State in recent years to just roll your own cigarettes. Washington State has some of the highest cigarette taxes in the Nation.

From the Seattle Times "New Port Orchard tobacco business for DIY smokers":

Taxes on cigarettes have increased since the passage of the federal Family Smoking Prevention and Tobacco Control Act of 2009. Smokers in Washington now pay just more than $3 of federal tax and just more than $1 of state tax on a pack of cigarettes typically costing around $7.50, according to Mike Gowrylow, spokesman for the state's Department of Revenue.

The Times gives an example of a local resident beating the system. Continuing:

Kathryn Davis, 78, lives on a fixed income, and has at times passed up grocery items to buy cigarettes.

On Thursday, Davis made her first visit to DIY Tobacco in downtown Port Orchard, where customers purchase loose tobacco and roll their own smokes at a deep discount.

Davis inserted a tray of paper tubes with filters into a large machine, dumped the tobacco in the top and waited. The contraption hissed and banged methodically, churning out the equivalent of a carton of smokes in about eight minutes.

The cost for materials and use of the machine is about $33 for 200 smokes, half to two-thirds of what Davis might pay for a carton of commercially manufactured cigarettes.

North Carolina is on the verge of boosting the State's cigarette tax by an astounding $1.00 a pack.

As John Stephenson of the National Taxpayers Union (NTU.org) points out:

Cigarette taxes are notoriously unreliable sources of revenue. The projection that North Carolina will see a windfall of more than $300 million does not account for the losses of revenue that will surely result from higher taxes as smokers seek out cheaper alternatives from other lower-tax jurisdictions or smugglers.

Meanwhile, the "roll-your-own" shops appears to be a growth industry in Washington, with similar stores opening up throughout the State.

Could North Carolinians and smokers in other states learn from Washington State's example?