Question

Suppose you are tasked by policymakers with finding a way to reduce the quantity consumed of some good which society views as generally harmful and undesirable (such as smoking). Assume the market for this good is perfectly competitive. What is one possible way to achieve this goal of reducing the quantity of the good consumed? There are two different approaches to this goal. For full credit you only need to explain one of the two. Be sure to clearly state what your policy suggestion is and the anticipated effect on the market using your understanding of the forces of supply and demand. (3-4 sentences)

Answer 1

Solution: . The quantity consumed of harmful good can be decreased by reducing demand by way of education and awareness. This will cause the demand curve to shift vertically downward. Botho equilibrium price and quantity will decrease. Price -tez d a quantity Also this ensures sustainable way of reducing the quantity demanded because producers will be discouraged of producing harmful goods.