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Homework answers / question archive / Using demand and supply analysis, briefly discuss the effect of each of the following on the market for cigarettes: A) A cure for lung cancer is found
Using demand and supply analysis, briefly discuss the effect of each of the following on the market for cigarettes:
A) A cure for lung cancer is found.
B) The price of cigars increases.
C) Wages increase substantially in states that grow tobacco.
D) A fertilizer that increases the yield per acre of tobacco is discovered.
A) A cure for lung cancer will increase the demand for cigarettes because if they are not harmful then more people will want to smoke them.
B) The price of cigars increasing will increase the demand for cigarettes because the individuals that used to some cigars will gravitate towards cigarettes as long as cigarettes and cigars are not made from the same products.
C) If wages increasing in tobacco producing states the cost of cigarettes will increase. This causes an increase in the price of cigarettes and a decrease in the supply of cigarettes.
D) A fertilizer that increases the yield of tobacco will decrease the production costs of tobacco. This will decrease the price of cigarettes and increase the supply of cigarettes.