Tobacco advertising, promotion, and sponsorship increase tobacco use and helps sustain it by attracting new tobacco users and discouraging tobacco users from quitting. A comprehensive ban on tobacco advertising, promotion, and sponsorship can reduce tobacco consumption. The blanket ban covers all forms of promotion, both direct and indirect. Direct forms include, among others, television, radio, print, and billboard advertising, while indirect forms include, but are not limited to, free distribution, price discounts, sponsorships, and promotions masquerading as CSR programs.

Taxes are an effective way to reduce tobacco use

Tobacco taxes are the most cost-effective way to reduce tobacco use, especially among young people and low-income groups. A tax increase that raises tobacco prices by 10% reduces tobacco consumption by about 4% in high-income countries and about 5% in low- and middle-income countries. However, high tobacco taxes are a method that is rarely implemented. Only 38 countries, or 14% of the world's population, have taxes on tobacco products exceeding 75% of the retail price.

Questions:

According to the data presented in the second section, is the demand for tobacco elastic or inelastic? 

What do you think is the reason behind the elastic or inelastic demand for tobacco? 

In light of your calculation of the elasticity of demand for tobacco, do you agree with the text that taxes are indeed the most effective means of reducing tobacco consumption? Why and why not? 

Assuming that the entire tax is reflected in an increase in the selling price, what is the tax rate that should be imposed to reduce consumption by 50%? 

Describe what happens to the graph of the demand or supply curve as a result of the measures taken to reduce tobacco consumption in the case of tax and non-tax measures (no drawing is required, the written description is sufficient).

Answer rating: 100% (QA)

To reduce the market quantity traded in goods like tobacco effective action has to be taken against both demand and supply This combined action can ensure greater effectiveness of the policy It is obs... View the full answer