Do you smoke? No? Sometimes? Regardless of whether you smoke or not, we are interested in your opinion: is demand for cigarettes elastic or inelastic? Are cigarettes a major need for smokers? Let smokers themselves try to answer this question. Are there any close substitutes for cigarettes? Candy? Lollipops? Chewing gum? Alcoholic beverages? If only these were such wonderful substitutes, we would not have so many people still smoking. In general, it is safe to say that demand for cigarettes is inelastic. How? If you are really interested, let us after a 2 of 2 brief review of existing research select the correct answer to the question: "Can price increase on cigarettes make you quit smoking?" Yes or no? Let's face it: now smokers have less pleasure from visiting various public places. In light of a certain discomfort that almost everywhere they go, they encounter restrictions on smoking and an inscription: No Smoking. Yet they may further get upset that the price of a pack of cigarettes has increased many times over just a few years. In these circumstances, one would assume that very large numbers of people have given up smoking. However, the results of the review of the world tobacco market indicate that the market is dynamic and total production and sales of cigarettes continue to rise. Studies of renowned scientists emphasize that an increase in the price of cigarettes by 10% reduces consumption of cigarettes among adults by 4% in the short term, and by 7.5 % over a long period (more than five years). In this regard, there is also the issue of public policy in the manufacturing of cigarettes and public health. The Ministry of Health continues to remind us on every pack of cigarettes that "Smoking Kills". Also, in newspapers, magazines and online publications we find a description of various diseases and horrible things that smoking will do to us. This is probably an effective measure to stop smoking for those consumers who care about their health and longevity. But even more effective would be the introduction of high taxes, two or three dollars per pack of cigarettes, as there is in Canada, UK, Ireland, Denmark, Norway and some other countries. Canadian tax of $3 per package (which is going up all the time) has helped to reduce per capita consumption by more than 50%.

A. Illustrate the effect of price on the demand for gas using a demand curve diagram

B. Analyze various other factors that you think influence demand for cigarettes.

C. Does raising the price on cigarettes reduce the number of smokers?

D. Indicate factors that support the idea that the demand for cigarettes is elastic. Based on this information, substantiate your point of view.