Microeconomic Issue of Social Importance Essay Example | Topics and Well Written Essays - 1000 words

Microeconomic Issue of hearty Importance - Essay ExampleOn the other hand, the suggestion too from the lit is that cigarettes are addictive, and so the demand may in fact be somewhat inelastic. This means that it may be that effort up prices through revenue may not curb intake as the authorities hope. whatsoever studies suggest this somewhat, even as those studies also suggest that demand is elastic for young smokers, new smokers, and those who invite low income. In the long run, therefore, as the population turns over, demand should go down due to revenue enhancement leading to higher cigarette prices. The issue at hand is the determination of exactly how cigarette taxation impacts demand, such as in terms of the demographic characteristics of the market response to the taxation and other connect aspects of demand. In general, in terms of supply and demand, we see from recent data and from insights from the literature that taxation has a large dampening effect on overall dem and for cigarettes (Chaloupka Meier and Licari Wasserman et al.).The overall take from the academic literature is that taxation does curb consumption. Moreover, the higher the price ontogenys resulting from higher taxes, the greater the reductions in demand and consumption. Other insights implicate that demand is more sensitive to price reductions rather than price increases. This means that reducing taxes can increase demand by a greater amount. This is in comparison to the reduction in demand from the resembling level of tax reductions. To illustrate, say taxes go down by 10 pct, and demand goes up by say 20 percent. Going the other way, if taxes go up by 10 percent, the demand does not go down by 20 percent, but just by half, at 10 percent for cigarettes. These and other insights are useful in understanding the microeconomic aspects of the impacts of taxation on cigarette consumption and economics. The rest of the paper explores these impacts more closely (Sylvain Bader et al. ).Data from 2012 strongly supports the