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Part 1: EC1F1A Introductory Economics. Autumn Term Essay. Consider public policy to reduce smoking. Government justification for its attempts to reduce smoking are based around the key points that: * Smoking damages health and increasing the price of a packet of cigarettes will reduce the number of smokers. * Revenues raised from the tax on tobacco will help to offset costs to the National Health Service from smoking related illnesses. a) Price elasticity of demand measures how much quantity demanded responds to changes in the price. The price elasticity of demand for a packet of cigarettes is about 0.4, this is an example of a product with an inelastic demand (because p.e.d<1). If the government wants to reduce smoking by 20% then the price of cigarettes must be increased by 50%. The price of cigarettes is currently £2.00 (50% 0f £2.00 is £1.00 ), meaning that the new price should be £3.00. The method of calculating...

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