Supply and Demand for Tobacco

957 WordsNov 24, 20134 Pages
A) I have chosen cigarettes to be my market transaction as it is has a very large and wide market. A cigarette is a product consumed through smoking and manufactured out of cured and finely cut tobacco leaves and reconstituted tobacco, often combined with other additives1, Cigarettes is produced to satisfy the growing population of smokers. Smokers are hooked to a substance called nicotine that is in a cigarette along with other harmful substances. Cigarette is a great product to be selling for the firm. As the customers(smokers) are addicted to nicotine , these firms can rely on them for continuous demand and they can easily increase supply. Therefore, the firms can easily monopoly the market and fix their own price. One of the…show more content…
For example, if people expect to earn a higher income next month, they may be more willing to spend some of their current savings buying cigarettes. As another example, if people expect the price of cigarettes to fall tomorrow, they may be less willing to buy an cigarettes at today’s price.3 The Size and Structure of the Population A larger population, other things being equal, will mean a higher demand for cigarettes. Changes in the way the population is structured also influences demand. Many Eastern countries have a growing population and this leads to a change in the demand as there are more young adults in China (for example).Thus demand of cigarettes might increase Summary The demand curve shows what happens to the quantity demanded of a good when its price varies, holding constant all the other variables that influence buyers. When one or more of these other variables changes, the demand curve shifts leading to an increase or decrease in demand. The table below lists all the variables that influence how much consumers choose to buy cigarettes.4 An example of demand curve shifting. The shift means an increase in demand with consequences for the other variable. Table 4.1. Variables that Influence Smoker To purchase Cigarettes. V ariable A change in this variable... Price Represents a movement along the demand curve Income Shifts the demand curve Price of related
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