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Medical research has shown the negative health effects of “secondhand” smoke. Recent social trends point to growing intolerance of smoking in public areas. If you're a smoker and you wish to continue smoking despite tougher anti-smoking laws, describe the effect of the following legislative proposals on your behaviour. As a result of these programs, do you, the individual smoker, benefit? Does society benefit as a whole?

a. A bill is proposed that would lower tar and nicotine levels in all cigarettes.

b. A tax is levied on each pack of cigarettes.

c. A tax is levied on each pack of cigarettes sold.

d. Smokers would be required to carry government-issued smoking permits at all times.

Short Answer

Expert verified
  1. As a result of this bill, some smokers might start smoking more to maintain their level of nicotine consumption since they are addicted to consuming a certain amount; this benefits the producer and not the society.

  2. This will reduce the consumption of cigarettes since the price will increase, and society will benefit.

  3. This will also increase the price of cigarettes and benefit society.

  4. The number of smokers will get reduced, and society will benefit.

Step by step solution

01

The consumption of the smoker will increase due to less nicotine in cigarettes

The lower levels of tar and nicotine will increase the number of cigarettes a smoker consumes since he is addicted to consuming a set of nicotine only. Such an increase in the consumption of cigarettes will increase the demand for cigarettes, so the producer will benefit by producing more. Society will suffer since increased consumption of cigarettes will also increase the pollutions levels.

02

Levy of tax will increase the price of cigarettes

Tax levied will be partly paid by the producer and partly by the consumer. This will increase the price of cigarettes both in terms of increased cost and reduced purchasing power. With the increase in the price, the demand for cigarettes will fall, resulting in lower consumption; lower consumption of cigarettes will result in good quality of air, increasing benefit of the society.

03

The price will increase if tax is levied on the pack of cigarettes sold

Whether tax is levied on packs sold or just generally on the pack of cigarettes, the tax will be shared by both the producers and the consumers. It will consequently increase the price of cigarettes. This will result in low consumption and low pollution, benefiting society.

04

Not all smokers will be able to get access to permits

Getting government permits is not easy; therefore, not all smokers will get a permit and smoke in public. Therefore this policy will successfully reduce smoking and will increase the quality of air. This will increase the overall social benefits of society.

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Most popular questions from this chapter

The market for paper in a particular region in the United States is characterized by the following demand and supply curves:

QD= 160,000 - 2000PandQS= 40,000 + 2000P

whereQDis the quantity demanded in 100-pound lots,QSis the quantity supplied in 100-pound lots, andP is the price per 100-pound lot. Currently, there is no attempt to regulate the dumping of effluent into streams and rivers by the paper mills. As a result, dumping is widespread. The marginal external cost (MEC) associated with the production of paper is given by the curve

MEC = 0.0006QS.

a. Calculate the output and price of paper if it is produced under competitive conditions and no attempt is made to monitor or regulate the dumping of effluent.

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a. An equal-rate effluent fee on firms located on the river.

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In a market for dry cleaning, the inverse market demand function is given byP= 100 -Q, and the (private)marginal cost of production for the aggregation of all dry-cleaning firms is given by MC = 10 +Q. Finally, the pollution generated by the dry-cleaning process creates external damages given by the marginal external cost curve MEC =Q.

a. Calculate the output and price of dry cleaning if it is produced under competitive conditions without regulation.

b. Determine the socially efficient price and output of dry cleaning.

c. Determine the tax that would result in a competitive market producing the socially efficient output.

d. Calculate the output and price of dry cleaning if itis produced under monopolistic conditions without regulation.

e. Determine the tax that would result in a monopolistic market producing the socially efficient output.

f. Assuming that no attempt is made to monitor or regulate the pollution, which market structure yields higher social welfare? Discuss.

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