Question

3. Externalities Medical research has shown the negative health effects of “secondhand” smoke. If you are a smoker and you wish to continue smoking, describe the effect of the following legislative proposals on your behavior. As a result of these programs, do you benefit? Does society as a whole benefit? Please restrict your analysis/ arguments to economic terms. Graphs are not needed. a. A bill is proposed that would lower tar and nicotine levels in all cigarettes. b. A tax is levied on each pack of cigarettes (i.e. tax on the producers). c. A tax is levied on each pack of cigarettes sold (i.e. tax on the consumers). d. Smokers would be required to carry government-issued smoking permits at all times

Answer 1

A) Smoking will be continued. The smoker and the soceity both will benefit as the amount of nicotine inhaled and exhaled by smoker will reduce.

B) Producers will pass on this cost to consumers in the form of high prices. Cost to smoker will rise. This will reduce smoking consumption. This will benefit both the smoker and soceity

C) Cost to smoker will rise. This will reduce his smoking consumption and its negative impact on soceity

D) Smoking will reduce as people who dont have permits or fail to get permits will not be able to smoke. This will benefit the soceity as smoking will reduce.