University of Phoenix
In the beginning, we will give an example about tobacco and how the price elasticity effect on the demand of this product. Tobacco is a plant that found in North and South America and then it moved to Europe. We chose tobacco because tobacco is not like a normal habit, tobacco is harm and one of the causes for cancer. The good thing is tobacco like other products so the demand of the product effect on some factors such as changing price and real incomes.
The Price elasticity of demand
All of us know that the price elasticity in tobacco measures the demand of the consumers and it depends on the change of price.
Let me give you an example about how the price elasticity will effect on demands or consumptions of this product. We will talk about the efforts for governments to reduce smoking through advertisements, campaign such as age limits for tobacco purchase, warning, restrictions on vendor machine and other public health advertisements. All of those tools is to reduce smoking. After that especially after the recession governments decided to make teens reduce smoking through changing the price elasticity of cigarettes so they increased the tax for teen smoking. Let me ask one question, why governments increased the tax for teens only? One reason for that which is the habit for teens to smoke is less than adults especially because the time and allowance for teens and we discovered the percentage of smoking already decreased. Some states in unites states such as New York increased the tax so the price for each pack is $9 also they make it in New York City $11 for each pack. In addition governments insist the smokers to pay all applicable federal and tax for states when they want to buy cigarettes by internet also it request from US postal office to do not shipping cigarettes. So from this example, we found that the price elasticity effects on the demand of this product
References: TobTaxy Capacity Building Workshop | 20-22 February 2012, Dublin, Ireland 11 | Retrieved from http://www.who.int/tobacco/economics/meetings/dublin_demand_for_tob_feb2012.pdf Tobacco Atlas retrieved from http://www.tobaccoatlas.org/industry/tobacco_companies/market_share/ Tobacco Firms Strategy limits retrieved from http://www.nytimes.com/2013/12/13/health/tobacco-industry-tactics-limit-poorer-nations-smoking-laws.html?_r=0