Question

Please read Ray Hainer's article, Social smokers aren't hooked on nicotine, just smoking, and provide your thoughts and opinions on the article. The tobacco industry is a typical example to consider when we discuss about a price elasticity of demand. While nicotine use can be addictive for many users, it is not addictive for the so-called social smokers. What can we say about the price elasticity of demand for nicotine products (such as cigarettes, tobacco, pipes) in the group of nicotine addicted users versus the group of social smokers? Can we say social smokers' demand is likely to be more elastic or less elastic than nicotine addicted users' demand?

a) More elastic
b) Less elastic
c) Equally elastic
d) Inelastic

Answer 1

The demand for nicotine products is more elastic among social smokers, but less elastic among nicotine addicted users.

Step-by-step explanation:

The price elasticity of demand measures the responsiveness of the quantity demanded of a product to a change in its price. For addictive products like nicotine, demand tends to be inelastic because addicted users are less sensitive to price changes. This means that the quantity of nicotine products demanded by addicted users is less likely to change significantly in response to price changes.

On the other hand, social smokers, who are not addicted to nicotine, are more likely to have elastic demand. This means that their demand for nicotine products is more responsive to changes in price. If prices increase, social smokers may be more inclined to reduce or even stop their consumption of these products.

In summary, the demand for nicotine products is more likely to be more elastic among social smokers who are not addicted to nicotine, while the demand for nicotine products is less elastic among nicotine addicted users.