Log in
Economics
4
answers
0
watching
80
views

Taxes to reduce teenage smoking? Many researchers believe the falling price of cigarettes during the mid-1990s caused an increase in teenage smoking, whereas price hikes during the late 1990s lead to a reduction in teenage smoking. Many economists believe the impact of rising and falling prices depends on the price elasticity of demand for cigarettes by teenagers.

Should taxes be used to raise the price of cigarettes as a way to reduce teenage smoking? Identify the pros and cons of your answer.

Watch
4
answers
0
watching
80
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share
Already have an account? Log in
Share
Already have an account? Log in
Share
Joshua Stredder
Joshua StredderLv10
28 Sep 2019
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

Analyze the following case study.

Two ways to reduce the quantity of smoking demanded Public policymakers often want to reduce the amount that people smoke because of smoking's adverse health effects. There are two ways that policy can attempt to achieve this goal. One way to reduce smoking is to shift the demand curve for cigarettes and other tobacco products. Public service announcements, mandatory health warnings on cigarette packets, and the prohibition of cigarette advertising are all policies aimed at reducing the number of cigarettes demanded at any given price. If successful, these policies shift the demand curve or cigarettes to the left. Alternatively, policymakers can try to raise the price of cigarettes. If the government taxes the manufacture of cigarettes, for example. cigarette companies pass much of this ta on to consumers in the form of higher prices. A higher price encourages smokers to reduce the number of cigarettes they smoke. In this case, the reduced amount of smoking does not represent a shift in the demand curve. Instead, it represents a movement along the same demand curve to a point with a higher price and lower quantity. How much does the amount of smoking respond to changes in the price of cigarettes? Economists have attempted to answer this question by studying what happens when the tax on cigarettes changes. They have found that a 10 percent increase in the price causes a 4 percent reduction in the quantity demanded. Teenagers are found to be especially sensitive to the price of cigarettes - a 10 percent increase in the price causes a 12 percent drop in teenage smoking. A related question is how the price of cigarettes affects the demand for illicit drugs, such as marijuana. Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes, so that high cigarette prices encourage marijuana use. By contrast, many experts on substance abuse view tobacco as a 'gateway drug' leading the young to experiment with other harmful substances. Most studies of the data are consistent with this view - they find that high cigarette prices are associated with reduced use of marijuana. In other words, tobacco and marijuana appear to be complements rather than substitutes.

100 word answer needed from article below:

Question:

Explain whether, and if so, you would expect laws that prohibit smoking in public places to affect the quantity of ciarettes traded in the market.

ARTICLE: Two ways to reduce the quantity of smoking demanded

Public policymakers often want to reduce the amount that people smoke because of smoking's adverse health affects. There are two ways that policy can attempt to achive this goal.

One way to reduce smoking is to shift the demand curve for cigarettes and other tobacco products. Public service announcements, mandatory health warnings on cigarette packets and the prohibition of cigarette advertising are all policies aimed at reducing the quantity of cigarettes demanded at any given price. If successful, these policies shift the demand curve or cigareetes to the left.

Alternatively, policymakers can try to raise the price of cigarettes. If the government taxes the anufacture of cigarettes, for example. cigarette companies pass much of this ta on to consumers in the form of higher prices. A higher price encourages smokers to reduce the amount of cigarettes they smoke. In this case, the reduced amount of smoking does not represent a shift in the demand curve. Instead, it represents a movement along the same demand curve to a point with a higher price and lwoer quantity.

How much does the amount of smoking respond to changes in the price of cigarettes? Economists have attempted to answer this question by studying what happens when the tax on cigarettes changes. They have found that a 10 per cent increase in the price causes a 4 per cent reduction in the quantity demanded. Teenagers are found to be especially sensitive to the price of cigarettes - a 10 per cent increasen in the price causes a 12 per cent drop in teenage smoking.

A related question is how the price of cigarettes affects the demand for illicit drugs, such as marijuana. Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes, so that high cigarette prices encourages marijuana use. By contrast, many experts on substance abuse view tobacco as a 'gateway drug' leading the young to experiment with other harmful substances. Most studies of the data are consistent with this view - they find that high cigarette prices are associated with reduced use of marijuana. In other words, tobacco and marijuana appear to be complements rather than substitutes.

As the U.S. Surgeon General warns on each pack of cigarettes, smoking can be hazardous to your health. Researchers estimate that smoking kills 440,000 Americans a year10 times the fatalities from traffic accidents. Smoking is the overwhelming cause of lung cancer, which is the top cancer killer among women. Four of five people with lung cancer die within three years. Smoking is also the leading cause of heart disease, emphysema, and stroke.

Thus, smoking imposes major health and economic costs. Policymakers try to reduce these costs by discouraging smoking, especially among young people. About one in four U.S. high school students were smokers in 2005, the same rate as in 2003. Each day, about 3,000 U.S. teens under 18 become regular smokers. Worldwide, an estimated 100,000 teens become regular smokers each day.

One way to reduce youth smoking is to prohibit the sale of cigarettes to minors. A second way is to raise the price through higher cigarette taxes. The amount by which a given price hike reduces teen smoking depends on the price elasticity of demand. This elasticity is higher for teens than for adults. Why are teenagers more sensitive to price changes than adults?

First, recall that one factor affecting elasticity is the importance of the item in the consumer's budget. Because teen income is relatively low, the share spent on cigarettes usually exceeds the share spent by adult smokers.

Second, peer pressure shapes a young person's decision to smoke more than an adult's decision to continue smoking (if anything, adults face negative peer pressure for smoking). Thus, the effect of a higher price gets magnified among young smokers because that higher price also reduces smoking by peers. With fewer peers smoking, teens face less pressure to smoke.

And, third, young people not yet addicted to nicotine are more sensitive to price increases than are adult smokers, who are more likely to be already hooked.

The experience from other countries supports the effectiveness of higher cigarette taxes in reducing teen smoking. For example, a large tax increase on cigarettes in Canada cut youth smoking by two-thirds. Another way to reduce smoking is to change consumer tastes through health warnings on packages. In Canada, these warnings include photos showing how smoking can affect the brain, teeth, and gums, and a wilted cigarette depicts male impotence.

In Australia, labels show gangrenous limbs, underweight babies, cancerous mouths, and blind eyes. Belgium adds corpses to the picture.

In California, a combination of higher cigarette taxes and an ambitious awareness program contributed to a 5 per cent decline in lung cancer among women, even as it rose 13 per cent in the rest of the country. (As of 2007, state taxes varied from a low of 7 cents per pack in South Carolina to a high of $2.58 in New Jersey.)

More generally, the message about the dangers of smoking along with the higher cost of cigarettes has affected over time. Only about 20 per cent of American adults now smoke, down from more than half in the 1960s.

According to the U.S. Centers for Disease Control and Prevention, each pack of cigarettes sold in the United States costs society $7.18 in higher health care costs and lost worker productivity. The added cost exceeds $150 billion a year, which works out to be about $3,400 per smoker per year.

What is the best way to prevent and reduce smoking? Briefly discuss.

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in