News article:
Summary
This news article talks about a price increase in cigarettes in order to finance public wage increases. Brands such as Marlboro and Rothmands will be increased in the price but the question was, will it affect people? They are predicting that the price movements won't affect people since the demand of the cigarettes are not affected due to it being inelastic. Since the smokers are addicted and smoke as a habit, they will learn to accept the price change. The revenues for the company will be higher for the tobacco industries.
Connections
The obvious connection in this article is the inelasticity of the cigarettes. People who are addicted to cigarettes won't care if the cigarettes price increases. Although the cigarettes may not seem like a neccessity, to some it may be. The demand of the product will slightly decrease. People will "try" to quit, or decrease the amount of cigarettes smoked in a day. The companies will be able to produce more cigarettes with more money, but they will have the same amount of consumers. The same can be said for things like alcohol and drugs or any addictive product.
Personal Reflection
Smoking is horrible. The government did a good thing by increasing the price in the cigarettes. Adding a government regulation will decrease the amount of smokers, but unfortunately, according to this article, the cigarettes became a neccesity and it is inelastic. The government should offer more things like a ban on cigarettes because tobacco is harmful to the liver. Canada can learn from this article and take action by adding more government regulations which will decrease the demand of cigarettes. But of course, the actions have to be smart or else it won't work.
Subscribe to:
Posts (Atom)