Cigarette Cigarettes Case Study

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INTRODUCTION

AIM OF COURSEWORK
The research in this report is motivated by a desire to better understand the market for
Cigarettes in UK through the application of economic tools and analysis. The focus is on the demand side of the market – cigarette consumption. This report creates an econometric model of consumption of cigarettes in UK. The model identifies the key economic factors that determine cigarette consumption and tests the degree of influence of those factors on consumption.

WHAT IS MICROECONOMICS?

The branch of economics that analyzes the market behavior of individual consumers and firms in an attempt to understand the decision-making process of firms and households. It is concerned with the interaction between individual buyers and sellers and the factors that influence the choices made by buyers and sellers. In particular, microeconomics focuses on patterns of supply and demand and the determination of price and output in individual markets.

QUESTION:
1. WHY FIRM ARE INTEREST TO KNOW THE PRICE ELASTICITY OF DEMAND AND CROSS ELASTICITY OF DEMAND OF ITS PRODUCT?

Price Elasticity of Demand.
The price elasticity of demand is to measure the responsiveness of the quantity demanded of a good to a change in price.
The degree responds of quantity demanded a change in price can vary considerably. These are several why firms gather information about price elasticity demand of its products. A firm will know much more about its internal operations and products
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