Cigarette smoking is widely recognized as the number one cause of cancer in the United States. One method the government can use to reduce cigarette smoking is to tax cigarettes. Read the Chaloupka article (1998) and answer the following essay prompts about the effect of taxation on cigarette smoking. Each answer should be two to three paragraphs each. A paragraph must consist of at least four sentences.
a) Who is likely to be more affected by tax increases on cigarettes: all adults or young adults? Why? Cite elasticity of demand estimates from the article to support your answer.
b) To have the greatest effect on reducing cancer from tobacco use, what other products should the government tax? Why?
c) What is the long-run elasticity of demand for cigarette smoking? What does this mean for the likely impact of taxes on long-term cigarette use? Why?
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