In: Other Topics

Submitted By himanshuk
Words 1750
Pages 7
JUNE 9, 2013
This blog will discuss the market of tobacco products through the applications of economic tools and analysis. To analyse the market, we will examine the price elasticity demand and income elasticity demand of tobacco products the factors affecting each of these and the externalities caused by this product. Further, to explore further into the tobacco market, this blog post will discuss the theory of Rational Addiction, which contributes greatly to tobacco consumption.

A. Elasticity of tobacco products

Before analysing the elasticity of the tobacco market, it is important to know the fundamentals of elasticity.

To start, elasticity refers to the degree of change of the demand or supply of a product in response to change in price of the product. The elasticity of products varies because consumers may find some products more essential than others. A good or service is considered to be highly price elastic if a price increase leads to a sharp change in the quantity demanded or supplied. Conversely, the demand and supply of price inelastic goods or services sees modest changes with any change in price. In most countries, the price elasticity of demand for tobacco products is fairly inelastic. This will be discussed further below.

I. Calculating price demand elasticity

To determine the price demand elasticity of a product’s demand curve, the following equation can be used.

Elasticity, Ped = (% change in quantity / % change in price)

If the elasticity value we obtain from the above formula is greater than or equal to 1, the demand curve for that product is considered to be elastic. On the other hand, if the value happens to be less than 1, the demand curve is inelastic.

Figure 1: An elastic demand curve. where a large decrease of quantity, Q would change due to any slight changes in P, Price. Can be shown by the…...

Similar Documents

Rural Economy in India

...Hybrid Seeds, Sesame Seeds, Sesbania Seed, Sunflower Seeds, Mustard Seeds, Oil Seeds, Plant Products, Plantation, Plants, Psyllium Seed, Fennel Seed, Fenugreek Seed, Herb Seeds, Tamarind Seed, Vegetable Seeds. Spices - Black Pepper, Chilli Powder, Chillies, Cinnamon, Cloves, Coriander Powder, Cumin, Curry Powders, Dry Ginger, Dry Red Chilly, Cardamom, Anise, Salt, Onion Powder, Pepper, Fenugreek, Clove, Ginger, Turmeric, Turmeric Powder. Tea and Coffee - Black Tea, Coffee, Coffee Beans, Darjeeling Teas, Assam Teas, Instant Coffee, Leaf Coffee, Leaf Tea, Packaged Tea, Green Tea, CTC Teas. Tobacco and Tobacco Products - Beedi, Betel nut Leaves, Betel nut, Bidi Leaves, Chewing Tobacco, Cigarettes, Arecanut, Jarda, Scented Tobacco, Smoking Tobbacco, Snuff, Opium, Pan, Chatni, Pan Masala, Gutkazarda, Zafrani Zarda. Cotton, Rubber, Jute etc.. - See more at:

Words: 558 - Pages: 3

1993 Dbq

...colonies expanded and grew more populous, they developed unique identies. The By 1700, the common religious spirit and close families of New England set it apart from the Chesapeake region, whose fertile soil and longer growing season attracted a more diverse population with different ideas about gov’t and reasons for comming to the New World. The individuals who settled the Chesapeake were motivated by hints rumors of wealth and quick profit, far different from the original Puritain settlers of New England escaping religious persecution in the Old World. When the Joint Stock Co landed at Jamestown, they thoug were looking for gold to match the success of the Spanish Empire abroad. Though no gold appeared, John Rolfe’s development of Tobbacco (Doc F) as a cash crop in 1612 and Virginia’s headright system ensured profiteers would continue to shape the Chesapeake and create a mercantilist atmosphere, while New England was to be a model for the world of the perfect society, “a city upon a hill” (Doc A). They were unified by Puritains sought respite from persecution in England and their numbers swelled New England during The Great Migration (After the civil war, this immigration reversed). So they were less concerned about ties to England than Chesapeake was. The types of groups that came over shaped the colonies as well. At times entire religious communities relocated to New England, families would be meant more concentrated populations in towns, more generations to pass on......

Words: 1386 - Pages: 6

HTHD-152 | Qatar Riyal | Gerard Butler