When looking at the tax increases on cigarettes, it is evident that young adults would be most affected by the increases. Smoking usually starts in the teen years and with an increase in the cost of cigarettes it appears that teen would be more sensitive to the price of the cigarettes and therefore they may be less likely to purchase cigarettes in the first place, thus lowering the amount if individuals who smoke. This would be because the habit of smoking id uually deep rooted by early adulthood.
According the Chaloupka (1999) “the price elasticity of demand, would explain the percentage change in the quantity demanded of a product”. The 1% increase in the prices of cigarettes would fall under the elasticity demand. The study that was completed implied that a 10% increase in the cigarette prices would result in a reduction if smoking by 3-5%. Thus concluding that by raising the prices of cigarettes, less people would be willing to pay the prices to smoke.
In order to have a stronger effect on reducing the risk of cancer, it is not just cigarettes that need to be taxed by the government. Studies have shown that id taxes are increased on cigarettes then adults will purchase longer cigarettes that provide the needed fulfillment. By smoking longer cigarettes, adults can reduce the amount of cigarettes needed. Thus going against the expected health benefits of government taxes on cigarettes.
Due to these findings, it would be wise for the government to increase taxes on the products used to make cigarettes, such as tar and nicotine along with smokeless tobaccos. It is not just cigarettes that cause cancer but any form of tobacco. Smokeless tobacco, also known as chewing tobacco, has the same probability of causing cancer and other health risks as does regular cigarettes. It would be beneficial to tax anything associated with cigarettes so that the government can detour people from smoking.
The long-run elasticity of demand is expected to decrease the amount of