Asked by Brett Blahnik on May 01, 2024
Verified
Which of the following, if true, would most effectively undermine the argument that raising cigarette taxes reduces the number of people who smoke cigarettes?
A) The demand for cigarettes is relatively inelastic.
B) The demand for cigarettes is relatively elastic.
C) The supply for cigarettes is relatively inelastic.
D) The supply for cigarettes is relatively elastic.
Demand for Cigarettes
The consumer's desire and willingness to purchase cigarettes at various prices, often studied for its health and economic implications.
Cigarette Taxes
Taxes imposed on the sale of cigarettes to increase revenue for the government and discourage smoking by raising prices.
Inelastic
A characteristic of demand or supply that shows a small response or change to variations in price levels.
- Identify the consequences of elasticity on behavior in the realm of public policy, highlighting the impact of sin taxes.
Verified Answer
RJ
Rajeika JarrettMay 06, 2024
Final Answer :
A
Explanation :
The demand for cigarettes being relatively inelastic means that consumers' buying habits are not significantly affected by price changes. This undermines the argument that raising taxes (and therefore prices) would reduce smoking, as it suggests people would continue to buy cigarettes despite higher costs.
Learning Objectives
- Identify the consequences of elasticity on behavior in the realm of public policy, highlighting the impact of sin taxes.