Economics for Business: Unemployment and Tobacco Control Measures in Australia

Running head: ECONOMICS FOR BUSINESS
Economics for business
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ECONOMICS FOR BUSINESS
Answer 1
The smoking rate of Australia who are of above eighteen years and over was around
12.8% in 2016. It has been found out that cigarettes are smoked by over more than one billion
people which includes over twenty percent of the total world population where more than
eight hundred million smokers comprises of men only.
Answer 2:
The above diagram states that when the demand is more inelastic the consumers bear
most of the tax burden. In the case of smoking, as the consumers are addicted to it, the
demand for cigarettes will be inelastic. The tax burden can be then passed on to the
consumers in the form of high prices without a decline in the equilibrium quantity.

ECONOMICS FOR BUSINESS
The above diagram shows that there is a presence of elastic demand and the supply
curve here is more inelastic which states sellers bear most of the tax burden. The tax burden
in this case is therefore, will be more on sellers. By introducing an excise tax the government
mainly creates a wedge between the price paid by the consumer and also on the price is
received by the producers.
Answer 3
A cost benefit analysis is a method where the business use to analyse decisions. It is
process which involves adding up the benefits of a course of action and then comparing the
costs related to it.
The Australian governments have worked a lot in order to reduce the consumption of
tobacco. The government have also planned to increase the rate of tax on cigarettes as it will
lead to fall in demand. As cigarettes are termed as demerit goods, consumers may
underestimate the costs of smoking. Smoking also consists of many negative externality,
where the social cost is greater than the private cost. It is advisable for a smoker to quit
smoking as thy age. The reason behind this is that smokers who have aged a lot will face