ipl-logo

Elasticity Of The Tobacco Industry

1162 Words5 Pages

To determine which one of the two goods would be preferable in terms of total amount of tax revenue that would be collected, we need to determine the elasticity of the two goods. Elasticity is a tool that measures the reaction of quantity demanded to a change in price of good (Parkin, 2010) (Parkins et al. 2013:75-76). If elasticity price is less than one, therefore the good is inelastic. However, if the elasticity price is greater than one, the good will be regarded as elastic. Determine D good 1 (Petrol) elasticity level Determine % change in quantity %ΔQ=(Q1g1-Q0)/((Q0+Q1g1)/2)×100= (35-40)/((40+35)/2)×100= (-5)/37.5×100= 13.33% Determine % change in price %ΔP=(P1 good 1-P initial)/((P initial+P1 good 1)/2)×100= (18-10)/((10+18)/2)×100= …show more content…

The Tobacco industry is impacted by the following factors: Increased Health regulations and health awareness of consumer Increasing excise tax and prices so consumers look for cheaper substitutes Substitutes for the byproducts of tobacco such as e-cigarettes According to Parkin (2010), the below table identifies the four Market Structures that exist in an economy along with their key characteristics: Market Structure Characteristics Perfect Competition Many firms, Free/easy access to enter and leave market, Firms are “price takers”, Firms all sell identical products and Consumers are well informed of market offerings Monopolistic Competition Many Firms, differentiated products, Low barriers to entry, Firms have some influence on price and Firms have low market share Oligopoly Few firms control majority of market share, High barriers to enter market Firms are price makers and Products may be identical or differentiated Monopoly One firm, No close substation to product, High cost and barriers to entry, Firm is price maker (Parkin et al.2013:221;223) The Tobacco Market can be categorized within the Oligopoly Market structure due to the following attributes: Few Firms control the Tobacco market …show more content…

This could inhibit entrants if production costs are too high Advertising and packaging regulations: Tobacco products have laws that govern advertising and packaging. This limit new entrants developing brand awareness and allows producers already in the market to keep brand loyalty from their clients Price Makers: As few producers in the market control a large market share, the producers are able to highly influence prices through their influence on purchasing input production resources, and as well as collusion in pricing Products may be identical or differentiated: These products are individually differentiated by branding, product quality and

Show More
Related

Publix Supermarket Survey Questions

178 Words | 1 Pages

What company did you select? Publix Supermarket What are some of their various product offerings? Give a couple of specific examples. The company offers wide variety of products like bakery, baby products, beauty and personal care, beer, and wine, groceries, they also have online shopping and delivery also their pharmacy to mention some.

Read More

Rockefeller Monopolies Analysis

281 Words | 2 Pages

Once their supply is limited the public have to pay the higher costs because that specific product is not available anywhere else. Trusts and Monopolies cause for higher prices because of the limited availability. I believe

Read More

The Monopoly Of Oil In The 1800's

502 Words | 3 Pages

This leads to consumers looking for cheaper substitutes for the product from other companies. Not only that, but with no competition, the value may go down if the prices are too high or too low. The consumer may not have the resources to purchase any other brand of the same product, but is forced to only purchase from the first company it came from. When the prices of oil go sky high, those who live in poverty may have to use every dime, nickle and penny that they have just so they can have the oil they need. It gives those who are struggling more pressure and tribulation.

Read More

Year 11 Economics Definitions

946 Words | 4 Pages

The price of a good rises from $4.00 to $4.50, and as a result, total revenue falls from $400 to $350. Is the demand for the good elastic, inelastic, or unit-elastic? The demand for the good is elastic because as the price of the good rises the total revenue falls. Good A has 10 substitutes, and good B has 20 substitutes.

Read More

Vera Bradley's Strengths

402 Words | 2 Pages

Appendix 1: PESTEL Analysis Political Factors: Economic Conditions: • When the economic experience the recession, customers will cut their budget on expending luxury goods. o 2006 to 2010, the contributed to a 0.6 percent annual decline in industry sales under the regression economics. • Asia-Pacific region will increase their consuming power in the future because their growing wealth levels and the living standard. Sociocultural Forces: • Social Value of Vera Bradley:

Read More

Analysis Of Ugly Is The New Look For Cigarette Packs By Tina Rosenberg

592 Words | 3 Pages

In Tina Rosenberg’s article, “Ugly is the New Look for Cigarette Packs”, the main issue focuses mainly on how packaging is used to both dissuade and persuade people when purchasing the product. More specifically, smoking is a product, with the ability to sell based heavily on how its customers portray the product. The argument on how to dissuade people from purchasing cigarettes is discussed heavily, and Rosenberg includes many examples used by various countries to succeed in decreasing in cigarette sales. On the other hand, the discussion on what is used to persuade customers into buying the cigarettes is section of her article that shows how easily people are swayed into purchasing a specific brand of cigarette. By mentioning how cigarette companies persuade customers, it also provides a secondary issue in the article, about whether or not it is ethical to persuade customers in this manner.

Read More

Pall Malls: A Rhetorical Analysis Of Cigarette Advertising

564 Words | 3 Pages

Tobacco, not only has it been one of the biggest markets in the american economy since colonial times,. It is one of the most persuasive products, jumping through metaphorical hoops and obstacles to increase the amount of consumers, even if their product causes cancer. One of the best tobacco advertiser is pall malls. It's not because they have the best cigarettes or have been around the longest, it's the way they have expertly used rhetoric to persuade their audiences into buying and using more cigarettes, taking hold of opportunities that present themselves, and adapting to overcome government advertising restrictions. In the early 1900’s, way before the introduction of the television and mass radio, the only way to advertise was the newspaper.

Read More

Foreign Corrupt Practices Act Of 1977

1086 Words | 5 Pages

The company Pfizer was found guilty of making illegal payments through subsidiaries “to foreign officials in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia to obtain regulatory approvals, sales, and increased prescriptions for its products” (“SEC Charges Pfizer…”, 2012, p.1). Not only were they making these payments secretly, but they were obtaining business without letting competitors know, which is a monopoly being formed through information asymmetry. There is also the case of Alliance One and Universal Corporation, where they were found guilty of making secret payments as well to Thailand to illegally get tobacco sales (“Sec Charges Two Global Tabaco Companies…”, 2010, p.1). This is a case where negative externalities are causing a monopoly. The introduction of monopolies through information asymmetry or negative externalities cause market failure for the Unites States, because it is hurting society and competitors are unaware of other firm’s doings when making their decisions.

Read More

Madcap Craftbrew And Bottleworks Case Analysis

693 Words | 3 Pages

Each product will have different increadents and different ways of packaging that is what will attract the buyers. Power of Buyers: High The power of the buyer is high due to the distributor, wholesales , restaurant, retailers and consumers , they have regulation that need to be followed like the different market channels in the United states with how the retailer and the consumers will receive the product. Substitutes: Medium /Growing Consumers may get bored of the product and use other products like wine, liquors, or even stop drinking other alcoholic beverages. The cost can affect them finding other products. Entry Barriers: medium

Read More

The Final Paper

1026 Words | 5 Pages

Thus, this signifies that the market structure overall look after and govern the degree of competition for merchandises and facilities in a specific market (Arndt, 2009). In fact, in a true implication, the market structure plays a pivotal and significant role in deciding pricing, economic health of any region (market), and business’ implementation and its furtherance. Focus upon researches in economic field, it is found that, basically, there are five major types of market structure are observed worldwide that are – Perfect competition, monopoly, duopoly, oligopoly, Monopolistic Competition. However, there are other different forms of hybrid market structure have been established with the passage of time (Arndt,

Read More

Imperial Tobacco: Socially Responsible Labor Practices

723 Words | 3 Pages

Imperial Tobacco is a multinational tobacco company headquartered in Bristol, England. Imperial Tobacco is the fourth largest cigarette producer in the world, with brands such as Davidoff, Weiss and Gaul. In addition to cigarette production, Imperial Tobacco is also the world 's largest cigar, tobacco and cigarette paper manufacturers. The origins of Imperial Tobacco Ltd can be traced back to 1901, when many British tobacco companies merged to fight the threat of American tobacco to the UK market. Imperial Tobacco.

Read More

Disney Oligopoly: The Market Structure Of Walt Disney

1249 Words | 5 Pages

Market Structure - Oligopoly Oligopoly is a market structure whereby a few number of firms owns a lion’s share in the market. This market structure is similar to monopoly, except that instead of one firm, two or more firms have control in the market. In an oligopoly, there are no upper limits to the number of firms, but the number must be nadir enough that the operations of one firm remarkably influence and affects the others (Investopedia, 2003). The Walt Disney Company is categorized under an oligopoly market structure.

Read More

Cigarette Tax Case Analysis

751 Words | 4 Pages

It also increase income inequality as the tax is fixed so the poor and the rich pay the same price. The advantages are higher government profit so the government can invest in merit goods and reduction of smokers in the long

Read More

Tobacco Company Comparison Essay

682 Words | 3 Pages

The top tier tobacco production companies all specialize in the business of making and selling cigarettes. While there are many different ways the tobacco can be blended, different additives that can be added, and varying levels of technology employed, there is not much difference in how the top tier sources and manufactures their products. (need good citation here) Individual differences in production do exist between companies and will be addressed in each company's section. What follows is the general methods used by the top tier firms.

Read More

Explain The Price Elasticity Of Demand For A Gas Station

561 Words | 3 Pages

Although both stations are established in the same area, they function in separate markets. In simple terms, each gas station serves different buyers in different parts of town. Due to their market, the price elasticity of supply will be elastic. Gas is considered an elastic good for the supplier because the quantity of the good supplied can easily be changed. For example, if the gas station needs to provide more gas, the next order for the good will be larger.

Read More

More about Elasticity Of The Tobacco Industry

Open Document