Asked Nov 19, 2019

Using supply and demand curves, show the effect of each of the following events on themarket for cigarettes.  Draw bith the supply and demand curves.

a. A cure for lung cancer is found.

b. The price of cigars increases.

C. Wages increase substantially in states that frow tobacco.

d. More states pass laws restricting smoking in public areas


Expert Answer

Step 1

Since we answer only up to 3 sub-parts at a time, we are answering the first three. If you want to get answered for the other sub-part as well then kindly upload the question again and one of our experts will help you.

(a) If the cure for lung cancer is found then it will lead to an increased demand of cigars because the people who left smoking or reduced smoking due to its harmful effects will start smoking more and this will lead to a rightward shift in the demand curve for cigars from DD to DD'. The initial demand curves are DD and SS and the new demand curve is DD'. There is an increase in the equilibrium price as well as equilibrium quantity.


Image Transcriptionclose

Price SS P DD' DD Q' Quantity

Step 2

(b) If there is an increase in the price of cigars then the quantity demanded of cigars will fall due to which the demand curve will shi...


Image Transcriptionclose

Price DD DD P P Quantity Q'Q SS


Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in




Related Economics Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: The widget market is competitive and includes no transaction costs. Five suppliers are willing to se...

A: Market Equilibrium:The market equilibrium exists at a point where market demand and market supply cu...


Q: In doing this problem, it helps to remember a few rule about exponents. The first rule is that, for ...

A: (a) If the capital and the labor increased by k times. The production function can be derived as fol...


Q: what benefits could the US gain by legalizing marijuana nation wide

A: The Marijuana is considered as a psychoactive drug which is made from the cannabis plant and is also...


Q: 3. You own WYNELL's Fashions, which sells prom dresses. Your firm has the following cost schedule: I...

A: The cost schedule of the firm producing the prom dress shows that the average cost of producing the ...


Q: 1. The table below presents hypothetical OLS results with used small SUV price information (in dolla...

A: (a) The predictive equation for the price of small used SUVs areP = 10,000 + 1000*(GN) +500*(GRN) + ...


Q: 12. As the outstanding debt of a nation becomes very large relative to the size of the economy, Grou...

A: The correct statement is “As the outstanding debt of a nation becomes very large relative to the siz...


Q: Number 7

A: The problem given above is a case of asymmetric information as one person have more information abou...


Q: Suppose that annual output in year 1 in a 3-good economy is 3 quarts of ice cream, 1 bottle of shamp...

A: The sum of the market values of all items are considered as the GDP of the nation. We can calculate ...


Q: 16.  According to the modern view of the Phillips curve, expansionary macroeconomic policy that lead...

A: The correct statement is “According to the modern view of the Phillips curve (PC), expansionary macr...