NEED A PERFECT PAPER? PLACE YOUR FIRST ORDER AND SAVE 15% USING COUPON:

4.8/5

Price Elasticity For Nicotine Products

Price Elasticity For Nicotine Products

_x000D_
Contents

_x000D_
TOC \o “1-3” \h \z \u HYPERLINK \l “_Toc377397333” What can we say about the price elasticity of demand for nicotine products (such as cigarettes, pipes, tobacco) in the group of nicotine addicted users, versus the group of “social smokers”? Can we say whose demand is likely to be more elastic? Why? PAGEREF _Toc377397333 \h 1

_x000D_

_x000D_
What can we say about the price elasticity of demand for nicotine products (such as cigarettes, pipes, tobacco) in the group of nicotine addicted users, versus the group of “social smokers”? Can we say whose demand is likely to be more elastic? Why?Elasticity is the change in the quantity of nicotine products consumed due to a change in the factors that affect its sale and in this case it is the price. In an effort to ensure that people are protected from health issues related to nicotine the government has increased the taxes charged on cigarettes (Cordes, 2005). The cigarette industry is more of a monopolistic market structure and an increase in tax is passed on to the consumer, this leads to an increase in the final price of the nicotine products.

_x000D_
There are two types of smokers, the ones who are addicted to nicotine and the social smokers. An analytical view of the differences would be:

_x000D_
a). an addicted smoker

_x000D_
An addicted smoker Is one who cannot go a day without smoking several cigarettes. Most of the times, they are referred to as chain smokers. If the person goes for a while without smoking they are bound to experience withdrawal symptoms like migraine, nausea and loss of appetite. This means that they are dependent on the cigarettes. Increases in the price of the cigarettes will affect them because cigarettes are a daily good they consume. In this case they may aim to decrease the quantity of cigarettes they smoke in order to maintain the habit (Landsburg, 2010). Their price elasticity curve will be elastic as an increase in the price level will lead to a decrease in the quantity consumed.

_x000D_
b). a social smoker

_x000D_
These are people who will smoke on specific occasions and when they are out with friends. To them the price of the cigarette has no effect on the quantity they consume because they do it once in a while and will not be affected by the increases in the quantity they consume. They consume the cigarettes because they enjoy the habit and not because they have to and the occasional smoking does not dig a hole in their budget. Their price elasticity curve is inelastic; this is because increase in the price does not lead to decrease in the quantity consumed (Landsburg, 2010).

_x000D_
Price elasticity for addicts Price elasticity for social smoker

_x000D_
Price Price

_x000D_
Quantity Quantity

_x000D_
References

_x000D_
Cordes J. Joseph, Ebel D. Robert, Gravelle G. Jane, (2005), The Encyclopedia of Taxation and Tax Policy, Oxford University Press, New York

_x000D_
Landsburg Steven, (2010), Price Theory and Application, Springer Publishers

_x000D_

Solution:

15% off for this assignment.

Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!

Why US?

100% Confidentiality

Information about customers is confidential and never disclosed to third parties.

Timely Delivery

No missed deadlines – 97% of assignments are completed in time.

Original Writing

We complete all papers from scratch. You can get a plagiarism report.

Money Back

If you are convinced that our writer has not followed your requirements, feel free to ask for a refund.

WeCreativez WhatsApp Support
Our customer support team is here to answer your questions. Ask us anything!