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"Government Plans Cigarette Tax Raise".
Member rating: No Rating | Words: | Submitted: Thu Mar 18 2004
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Sagar Manilal 20-Feb-2004 Commentary Trial Government Intervention "Government Plans Cigarette Tax Raise" Cigarettes are a very popular demerit consumer good. A de-merit good is one which is undesirable, likely to be over-consumed, and have negative externalities. As this good is a habit or even a necessity to the smokers, it then has an inelastic demand curve. Inelastic demand is where quantity demanded or supply changes proportionately less than the price. The diagram below shows that an increase in the price of cigarettes is inelastic and as the price rises, the total revenue will also rise. Total revenue is the quantity sold at a given price; it is also the sales revenue or the income from sales. The quantity demanded changes by a smaller percentage to the increase in price. Demand is the amount of some goods or services, which a consumer is willing and able to buy per period of time. This shows that...
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