Question
Public service announcements, mandatory health warnings on cigarette packages, and the prohibition of cigarette advertising on television are policies designed to reduce the demand for
Public service announcements, mandatory health warnings on cigarette packages, and the prohibition of cigarette advertising on television are policies designed to reduce the demand for cigarettes (and shift the demand curve to the left).What is the impact of raising the price of cigarettes (through tobacco taxes) on the quantity of cigarettes demanded. Does the demand curve shift? An increase in the price of cigarettes can be shown by a movement along the original demand curve?Studies have shown that a 10% increase in the price of cigarettes causes a 4% reduction in the quantity of cigarettes demanded. For teens, a 10% increase in price leads to a 12% drop in quantity demanded.Studies have also shown that a decrease in the price of cigarettes is associated with greater use of marijuana. Thus, it appears that tobacco and marijuana are complements.
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