Question

Consider the demand of cigarettes. Suppose the government increases the cost of cigarettes by raiding cigarette taxes. How will this affect the demand of cigarettes over time? if the cost of cigarettes increases, then the quantity of cigarettes demanded will

decrease, and this effect will likely become larger (in absolute value) over time.

Answer 1

If the cost of cigarettes increases, demand for cigarettes will surely decrease.

Step-by-step explanation:

Almost all demand curves share the fundamental resemblance of their declining slopes from left to right, incorporating the law of demand: as price increases, quantity demanded decreases, and conversely, as price decreases. , the quantity demanded increases. With this, we can conclude that in the case of cigarettes, if the cost for this product increases consumers will consume less cigarettes, then demand will fall.

Answer 2

Taxes will have little impact on reducing demand for cigarettes

Step-by-step explanation:

The levying of a tax on cigarettes will increase its cost to consumers, because taxes will be passed on to the consumer. However, the demand curve for cigarettes is inelastic, that is, because the cigarette is an addictive product, its price increase will not have a major impact on demand, ie it will not substantially change the amount consumed after the increase. Price Thus, over time the amount of cigarettes demanded will remain practically constant, due to the low sensitivity of demand to price changes.