Analysis of Unemployment and Tobacco Reforms in Australia

Task description:
Essay 1:
Davidson and De Silva (2018) have written a recent article entitled as “Did Recent Tobacco
Reform change the Cigarette market” (pp. 55-74).
Based on the above you are required to critically answer, not least, the following questions:
1. Compare and contrast the rate of cigarette smoking in Australia with your home country
and the world average rate.
In the US, the prevalence of cigarette smoking is 16.8% compared to the world prevalence rate
of 20% and Australia at 12%. This shows that more people smoke cigarettes in the world and the
US on average compared to Australia (WorldBank data).
2. Draw and label fully a supply and demand curve diagram to explain how an excise tax
on cigarettes affects:
Q3 Q1Q2
P1
P2
Excise tax
Inelastic demand
Supply
Elastic demand

In the case the demand is elastic, the increase in price due to the excise tax will cause a more
than proportionate decrease in the quantity demanded from Q1 to Q3. The government revenue
will therefore be (P2-P1) *Q3
In case the demand is inelastic, the increase in price due to the excise tax will cause a less than
proportionate decrease in the quantity demanded hence the move from Q1 to Q2. The
government revenues will therefore be (P2-P1) *Q2
3. Explain the id******** cost ********s benefit when making decisions. Use this idea to
analyze as to why: the government wishes to reduce the rate of smoking; and - a smoker as
they age should quit smoking.
Each year,
smoking kills an
estimated
15,000
Australians and
costs Australia

$31.5 billion in
social
(including
health) and
economic costs.
Each year,
smoking kills an
estimated
15,000
Australians and

costs Australia
$31.5 billion in
social
(including
health) and
economic costs.According to the article, cigarette smoking has accounted for over 150000 deaths annually and
has increased the economic costs of healthcare to the government. A decrease in smoking rates is
bound to lead to cost savings in these two areas. There is evidence to suggest the higher impact
of tobacco smoking in older individuals compared to when they are young and therefore an
individual should gain more if they quit smoking at an older age (Davidson & de Silva, 2018).