a) Draw what you consider to be a realistic demand and supply diagram for the
cigarettes market. Clearly label the equilibrium (assume no tax).
b) Using the same diagram, explain, how imposing tax on tobacco products might
impact the tobacco market.
c) What are the welfare implications of the tax? For consumers? Producers?
Government? Society as a whole?
d) Define price elasticity of demand.
e) Given the information provided in the text, calculate the approximated price
elasticity of demand for tobacco products.
f) How far do you agree with the statement that taxes are successful in significantly
reducing demand for tobacco products?
g) What other, alternative measures, could country struggling with excessive smoking
h) Why governments should aim at reducing consumption of tobacco products?