The U.S. government administers two programs that affect the market for cigarettes. Media campaigns and labeling requirements are aimed at making the public aware of the health dangers of cigarettes. At the same time, the Department of Agriculture maintains price supports for tobacco. Under this program, the supported price is above the market equilibrium price and the government limits the amount of land that can be devoted to tobacco production. Are these two programs at odds with the goal of reducing cigarette consumption? As part of your answer, illustrate graphically the effects of both policies on the market for cigarettes.
The U.S. government administers two programs that affect the market for cigarettes. Media campaigns and labeling requirements are aimed at making the public aware of the health dangers of cigarettes. At the same time, the Department of Agriculture maintains price supports for tobacco. Under this program, the supported price is above the market equilibrium price and the government limits the amount of land that can be devoted to tobacco production. Are these two programs at odds with the goal of reducing cigarette consumption? As part of your answer, illustrate graphically the effects of both policies on the market for cigarettes.
Chapter2: Using Economics To Study Health Issues
Section: Chapter Questions
Problem 1QAP
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Question
The U.S. government administers two programs that affect the
market for cigarettes. Media campaigns and labeling requirements
are aimed at making the public aware of the health dangers of
cigarettes. At the same time, the Department of Agriculture
maintains price supports for tobacco. Under this program, the
supported price is above the market equilibrium price and the
government limits the amount of land that can be devoted to tobacco
production. Are these two programs at odds with the goal of
reducing cigarette consumption? As part of your answer, illustrate
graphically the effects of both policies on the market for cigarettes.
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