Why are taxes, one traditional remedy for negative externalities, less than ideal for smoking cessation in the United States? a. Nicotine is addictive/demand is inelastic, and smokers are mostly poor, so in effect cigarette taxes reduce the quality of life of people we're trying to help without substantially reducing smoking b. Demand is inelastic, and smokers are mostly rich, so they don't reduce smoking as a result of taxes c. Demand is elastic, and smokers are mostly old, so taxes reduce smoking but cause increased anxiety among the elderly d. Demand is elastic, and smokers are mostly young, so they quit smoking but are then more likely to experiment with illegal drugs

Microeconomics
13th Edition
ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter17: Market Failure: Externalities, Public Goods, And Asymmetric Information
Section: Chapter Questions
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Why are taxes, one traditional remedy for negative externalities, less than ideal for smoking
cessation in the United States?
a. Nicotine is addictive/demand is inelastic, and smokers are mostly poor, so in effect cigarette
taxes reduce the quality of life of people we're trying to help without substantially reducing
smoking
b. Demand is inelastic, and smokers are mostly rich, so they don't reduce smoking as a result of
taxes
c. Demand is elastic, and smokers are mostly old, so taxes reduce smoking but cause increased
anxiety among the elderly
d. Demand is elastic, and smokers are mostly young, so they quit smoking but are then more
likely to experiment with illegal drugs
Transcribed Image Text:Why are taxes, one traditional remedy for negative externalities, less than ideal for smoking cessation in the United States? a. Nicotine is addictive/demand is inelastic, and smokers are mostly poor, so in effect cigarette taxes reduce the quality of life of people we're trying to help without substantially reducing smoking b. Demand is inelastic, and smokers are mostly rich, so they don't reduce smoking as a result of taxes c. Demand is elastic, and smokers are mostly old, so taxes reduce smoking but cause increased anxiety among the elderly d. Demand is elastic, and smokers are mostly young, so they quit smoking but are then more likely to experiment with illegal drugs
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