Price Elasticity of Demand: Analysis

5 May 2017

Cigarette smoking is widely recognized as the number 1 cause of cancer in the United States. One method the government can use to reduce cigarette smoking is to tax cigarettes. Read the Chaloupka article (1998) and answer the following essay prompts about the effect of taxation on cigarette smoking. Each answer should be two to three paragraphs each. A paragraph must consist of at least four sentences. a) Who is likely to be more affected by tax increases on cigarettes: all adults or young adults?

Why? Cite elasticity of demand estimates from the article to support you nswer. I believe that the cost of cigarettes in todays bad economy have more of an impact on young adults versus adults. Young adults make less money and are less economically stable than adults. I believe it would be easier to sway young adults from smoking because of financial inadequacies as well as the fact they are less likely to be as addicted as adults based on the time of length smoking. The article lumps components youth access into 9 laws.

Price Elasticity of Demand: Analysis Essay Example

Even so, from 1996 to 1996, there has been little progress, therefore discrediting the tactics. The paper also looks at data from the U. S. but also that of other countries. Some articles have found that cigarette smoking mitigation is more effective in lower income countries in that income plays a very crucial and more predominant role. [1] The Chaloupka suggests that young men are more susceptible than young woman to the price of cigarettes by comparing McDonalds to Burger King. The elasticity of participation was almost double that of women’s.

More specifically, young African American men seemed to have been the most responsive to price increases. b) To have the greatest effect on reducing cancer from tobacco use, what other products should the government tax? Why? The government should tax all tobacco related products including smokeless tobacco. They should also tax delivery methods including pipes, bongs, rolling paper, and anything else associated with delivering tobacco into the system. It is widely established and accepted that all tobacco causes cancer so taxing it makes sense.

Taxing devices associated with tobacco also makes sense as an additional deterrent. [2] Alcohol should also be taxed in that there are research studies that show the use of alcohol increases the risk and susceptibility of cancer. There has not been an xact reason established for alcohol contributing to cancer but it is likely that alcohol causes cancer by increasing hormone levels. Another thought is that it may be carcinogenic because of the way in which alcohol is metabolized, which might make certain cells more susceptible to tobacco carcinogenic.

Types of cancer that alcohol might have the most impact on are oral and pharyngeal. [2] Although the association between alcohol and tobacco isn’t yet pinpointed, there is no denying a relationship. For these reasons, products related to tobacco as well as alcohol should be taxed by he government in an attempt to mitigate cancer. c) What is the long-run elasticity of demand for cigarette smoking? What does this mean for the likely impact of taxes on long-term cigarette use? Why?

Research shows that increases in the price of tobacco products induces a considerable reduction in smokers, or quantity consumption. This shows that the demand for tobacco products is elastic and susceptible to price intluencing. Since price increases nave historically been beneficial in decreasing demand for tobacco, it is prudent to continue to trend in the most efficient means necessary. The population of tobacco users as a whole is large, therefore even the smallest percentage of changes in behavior can have large health impacts from a pure quantity standpoint.

Smoking is a luxury that even though can be addictive, there still remains a level of volunteerism that makes consumers able to react to higher costs. Especially in this state of the economy, it is easier today to be influenced by price increases than it has been in the past. There would also be a positive impact on young adults and new smokers. The incentive to start smoking will not be very enticing because of the high price of tobacco. While taxation doesn’t seems to be a solution in cancer prevention, there is definitely no denying that it is an effective deterrent in mitigating tobacco usage.

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