Thursday, April 14, 2011

Could New Smoking Stastics Reduce Cigarettes Bought?

According to a new poll, 500,000 deaths occur each year due to smoking. Could these new statistics cause people to buy less cigarettes? According to this poll, 7% of adults in America smoke 20 cigarettes a day, which has gone down from the 23% of adults that smoked in the 1970s. However, half a million deaths per year from smoking alone is alarming, and is good enough reason for a tax increase on cigarettes. While this idea is still up in the air, how would this affect cigarette consumers? Most people would think that this would make the demand for cigarettes elastic, with the demand changing based on the price and tax of cigarettes. However, seeing that most smokers are addicted to it, and they'll continue to buy cigarettes no matter the price or tax, the demand for cigarettes is seemingly inelastic. So the question becomes, who do we tax? Taxing the consumers won't change anything, but would taxing the producers have a change? Since the companies are all about profit, and putting a tax on the production of cigarettes would decrease profit, this would cause a decrease in production. The result of this decrease is a shortage in cigarettes, driving prices higher so they can be at equilibrium, which would hopefully weed out those who aren't committed enough to smoking to pay the higher prices. Comment below, and tell me what you guys think.

-Mark E.

3 comments:

  1. Most people would think that since people die from cigarettes every year that the demand for cigarettes would decrease. It would decrease because people would see that these “cancer sticks” do nothing good for a person but harm them. Now the question is whether to tax the consumers of producers. Some say the tax should be put on the consumers because of the risk the cigarettes cause to people’s health. Seeing that most people are addicted to the nicotine in the cigarettes means consumers would buy the cigarettes no matter what the price is. As a personal experience I have a family member that smokes and he has been smoking ever since he was twenty. He is now at the age of forty five and is at risk. My opinion is that the tax should be put on the producers. Taxing the consumers wouldn’t do anything and taxing the producers would change the producers production of their product. In this case the tax on the product would be the producers cigarettes. This would change their quantity of cigarettes being made which would lead to an increase in demand. The prices for cigarettes would go up and the consumers would most likely dislike it, but still buy a pack of cigarettes because of their addiction.

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  2. I disagree; I believe that taxing the producers will not affect the supply. This is because since cigarettes are an inelastic product, the producer would just increase the price of cigarettes to make up for the profit lost by the taxes. As well, even with the taxes, it wouldn’t make any sense for the firm to cut on supply since demand of the product will stay the same, if they did, it would only mean that they decided to make less profit by decreasing the volume of supply.
    Santiago z

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  3. Thanks for your posts guys, but what i believe that taxing will do, is weed out those who aren't as committed to smoking. Plus, the taxes would go to the government, which in this time of recession would be useful. Even if taxes don't stop people from smoking now, it'll at least repel people from starting.

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