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It has been a long time now since the Australian government started to run programs, which are aimed to reduce the amount of cigarettes consumed. Cigarettes are pieces of tobacco in a roll of thin paper for smokingand they are stated today as a legal stimulant drug, which can heavily affect the smokers' health and the people around them. This drug is more popular today than ever and is considered to be the number one factor, which causes lung cancer. The Australian government runs two main programs in order to affect the market of cigarettes. One program is the media campaigns and labeling requirements, which are designed to make the public aware of the dangers of cigarette smoking and the second program is putting a tax on cigarettes. Both programs affect cigarette consumption and the price of cigarettes.
Media campaigns and labeling requirements, which are aimed at making the public aware of the dangers of cigarette smoking, have an impact on the demand curve. Commercials and adds on T.V. radio, magazines make the public realize and think how cigarette smoking may affect them and therefore they will quit smoking and the quantity sold will decrease. Whenever any factor, which affect demand changes, other than price, the demand curve shifts . In this case when people watch commercial against smoking on T.V., their taste might change. As a result of the decrease in the quantity sold, the demand curve will shift to the left . From the graph we can say that
As quantity demanded decreases, theprice drops and the quantity sold decreases as well .
In this situation (graph) the elasticity of demand is fairly inelastic because the public, which consumes cigarettes, will consume it no matter what the price is or the labeling on each packet, because they consider it a necessity , but when they see the media campaigns, some people
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Do respond to it and decide to quit smoking. Because of that, the new demand curve (D) will be more elastic in the short run, after some potential consumers changed their taste. In the long run the demand curve will be even more elastic because of some people who are considering smoking, will change their minds after seeing on T.V. what cigarettes might do to their lungs.
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