Chapter4: Markets In Action
Section4.2: Can The Laws Of Supply And Demand Be Repealed?
Problem 4YTE
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Why are taxes, one traditional remedy for negative externalities, less than ideal for smoking cessation in the United States?
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Demand is inelastic, and smokers are mostly rich, so they don’t reduce smoking as a result of taxes |
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Demand is elastic, and smokers are mostly old, so taxes reduce smoking but cause increased anxiety among the elderly |
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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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