Managerial Economics - Analyze demand, supply, equilibrium prices

Managerial Economics /

Analyze demand, supply, equilibrium prices, and price elasticities as a quantitative tool to forecast changes in revenues.

Some have argued that higher cigarette prices do not deter smoking. While there are many arguments both for and against this view, some find the following argument to be the most persuasive of all: “The laws of supply and demand indicate that higher prices are ineffective in reducing smoking. In particular, higher cigarette prices will reduce the demand for cigarettes. This reduction in demand will push the equilibrium price back down to its original level. Since the equilibrium price will remain unchanged, smokers will consume the same number of cigarettes.” Do you agree or disagree with this view? Explain. 

Discussion Question Information: Answer all questions thoroughly, and be sure to provide one (1) direct response to the discussion question prompt and one (1) peer response. When posting peer responses, elevate your peers by asking probing questions that encourage your peers to engage in a more meaningful and deeper manner or by presenting additional ideas from research.