The Legal Australian Cigarette Market

Question 1: The legal Australian cigarette market
Answer 1(a)
Answer 1(b)
D
D
S
S
$31/PACK
$309 for 25 packs
Price in $
o x
Y

In the above graph OY shows the cost of a pack of cigarettes and OX shows quantity of ciga-
rettes demanded and provided. At the cost of $31 quantity demanded and provided for cigarettes
is 309 million packs of cigarettes. Here it is assumed that the market of cigarette is perfectly
competitive as there is nothing unmistakably referenced in the issue with respect to showcase
structure of the item. In this kind of market cost is chosen by the market powers i.e., request and
supply. So at point E the two curves cross with one another and vender are prepared to supply
and purchasers are prepared to purchase now.
Answer 1(c)
Education programmes discouraging Cigarette smoking
An education program to demoralise cigarette smoking will will help the consumers to curtail
their need for cigarette smoking. (Saffer & Chaloupka, 2016) This data as for antagonistic well-
being effect of cigarette smoking will actuate the cigarette smokers to lessen the quantity of ciga-
rettes they smoke and in this way would bring about a reduction in demand for cigarettes.When
demand for a decent declines the demand curve shifts leftward or descending.
Following is the necessary figure -

The above figure shows that training with respect to antagonistic wellbeing effect of cigarette
smoking has prompted the individuals to curtail their smoking undertakings and along these lines
has brought about a reduction in demand for cigarettes and has moved the demand curve for cig-
arettes descending.
D
D
S
S
P1
Q1
Price in Cig $
o x
Y
P2
Q2
E1
E2
Qty of cig

The new equilibrium is accomplished at point E2. The new equilibrium cost is $P2 per parcel
and new equilibrium amount is Q2 bundles. In this manner, both equilibrium cost and equilib-
rium amount has diminished because of instruction program to demoralize smoking
Answer 1(d)
D
D
S
S
P1
Q1
Price in Cig $
o x
Y
P2
Q2
E1
E2
Qty of cig
Consumer burden
Producer burden