Essay Tobacco

discuss the implications of price elasticity of demand for the  government tobacco taxation policy. Instructions:

First of all we will define some key concepts, Price elasticity of demand is ameasure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its Price.
As we all know tobacco is one of the biggest vice of thehuman being arround the world, people of all ages, different sex, different cultures they consume it, and people who does it is a big vice for them, almost a necessity, what makes tobacco an Inelasticgood.
The snuff tax rate is differentiated by type of product, as well as cigars are granted a rate of 52.6%, to snuff produced a rate of 59.7%. Each cigarette pay a specific tax equal to 0.0000675UTM and also each package, box or package pays a tax of 62.3% applicable on the sale price to the consumer, including taxes.
As tobacco harms the health and may produce you cancer on your body theGovernments need to try to reduce the use of it with different ways as publicity or the most direct on the consumer implying a big tax on it. As the Government can not cancel the sell of tobacco justbecause it harms your health the Ministry of Health has different targets and one of them is to reduce the consumption of tobacco, so they have to promotion the risk that it has to consume it, but aspeople already know that there is still a big amount of all the consumers that are still consuming it so the Government implies a big tax on the tobacco that reduces the quantity selled of it because thePrice rises a lot.

On this graph we can clearly see a negative displacement of the Supply that is caused because of the new Price , the P increased to P1 that represents the Price + tax that theconsumers have to pay. The expected effect that the Government wanted to achieved it was completed, that was to reduce the quantity from Q to Q1 .
In conclution the Government can not ban the use...