Tobacco Industry: Supply and Demand
The tobacco industry has been a heavy hitter for raking in cash from consumers. The many types of taxes that have been placed on the luxury have been in hopes of driving down the smoking population. There have been many campaigns to urge smokers to quit, but the government's heavy tax on the good is still one of the main reasons why smokers are putting out their butts. But is taxing the consumers enough to put the tobacco industry out of business, or will people continue to buy tobacco products at whatever price the market sets? The majority of the nation is in favor of the high prices, but it is hurting buyers more than the sellers.
Cigarette sales have both a state and a federal tax imposed on the product. The sellers attempt to shove as much of the cost onto the consumer as they can so that they can make the most amount of money possible (Equilibrium, 2006). With consumers still pursuing their smokes and chewing tobacco, they have no choice but to pay whatever the sellers have on the market. There isn't a strong substitute for these goods, and there are no other products that contain the drug nicotine. There may be many sellers of tobacco, but all of the competition has to endure both taxes, while the consumers shell out more money every year for their harmful habit.
With the government pushing these imposed taxes on producers, and consumers footing the bill, the tobacco market is taking somewhat of a toll. The hope of attracting future smokes has decreased with the increasing taxes being imposed. The tradeoff of having the tax support children's health care is more appealing to the public, and with a 75-cent increase that much of the nation is agreeing on, it wi ...