Question

(The Cigarette-Smokers Problem) Consider a system with three smoker processes and one agent process. Each smoker continuously rolls a cigarette and then smokes it. But to roll and smoke a cigarette, the smoker needs three ingredients: tobacco, paper, and matches. One of the smoker processes has paper, another has tobacco, and the third has matches. The agent has an infinite supply of all three materials. The agent places two of the ingredients on the table. The smoker who has the remaining ingredient then makes and smokes a cigarette, signaling the agent on completion. The agent then puts out another two of the three ingredients, and the cycle repeats. Write a program to synchronize the agent and the smokers.

Answer 1

To address the externality of second-hand smoking and reduce cigarette consumption, a supply and demand graph depicting deadweight loss and adjustments in social optimal price and quantity is necessary. Policies such as taxes and anti-smoking campaigns target the elasticity of demand, which differs for youth and adults, to shift consumption patterns and reduce smoking rates.

Step-by-step explanation:

The impact of externalities on the market for cigarettes and the role of elasticity of demand in influencing smoking behavior are key concepts in economics. To show the market for cigarettes in equilibrium, a supply and demand graph must be drawn. The intersection of the supply and demand curves indicates the private market price (Pm) and quantity (Qm). However, when considering second-hand smoking's negative externalities, the social optimal output and price (Pe and Qe) would be different. The graph should depict the deadweight loss between the private equilibrium and the socially optimal point, illustrating the cost to society not accounted for in the private market.

To reduce the quantity of cigarettes demanded, the inelastic demand curve must shift left. Public programs and anti-smoking campaigns can help achieve this shift. If cigarette demand were more elastic, a tax increase—if passed to consumers—would substantially decrease the quantity smoked, especially for youth, whose smoking patterns are more elastic than adults'. The price elasticity of demand for cigarettes among regular adult smokers is relatively low (0.3), indicating that price increases lead to smaller reductions in quantity smoked, and tax increases are largely passed on to consumers as higher prices. Thus, while taxes can raise government revenue, they may not significantly reduce smoking unless demand is more elastic.