Asked by maria humayra on Jul 06, 2024
Verified
Statement I: Canada's $3 per pack cigarette tax has helped cut per capita consumption since 1980.
Statement II: Higher cigarette prices have practically no effect on reducing cigarette consumption.
A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.
Per Capita Consumption
The average consumption of goods and services per person within a particular population.
Cigarette Tax
A tax imposed by governments on the sale of cigarettes to raise revenue and discourage smoking by increasing the price.
Cigarette Prices
The retail cost of cigarettes, which can be influenced by factors such as taxes, production costs, and demand.
- Identify how changes in price affect total revenue depending on the elasticity
- Describe how consumer preferences and income changes affect demand
Verified Answer
RK
Rohtash KumarJul 08, 2024
Final Answer :
A
Explanation :
Statement I is true and supported by research, as a study by the Canadian Cancer Society found that a 10% increase in cigarette prices can lead to a 4-5% decrease in cigarette consumption. Statement II is false, as there is significant evidence that higher cigarette prices do lead to reduced consumption, especially among youth and low-income populations.
Learning Objectives
- Identify how changes in price affect total revenue depending on the elasticity
- Describe how consumer preferences and income changes affect demand