Question

How would you respond to this post?

When examining price elasticity, we know that this measures the responsiveness of quantity demanded relative to changes in price level (Douglas, 2012). Price elastic demand is the reaction to price changes, up or down, where the percent change in quantity is significantly larger than the price change (Douglas, 2012). When looking at the nicotine industry, we’ve seen large changes over the past 20 years. Smoking went from being a popular and accepted activity, to one that is basically banned in all buildings and closed spaces, and even some open spaces due to the health issues it causes not only the smoker, but the second-hand smoke victims. In 2009, the government passed the Family Smoking Prevention and Tobacco Control Act which allowed the FDA Center for Tobacco Products to establish nicotine product standards for tobacco products that can improve public health (Ribisi, Hatsukami, Huang, Williams & Donny, 2019). This was largely ineffective as they found many people given the low-nicotine products created an underground market for the higher nicotine products. They also began imposing taxes on these products which drove prices up significantly for the consumer as a deterrent. However, given the highly addictive nature of nicotine, the price increases were not a deterrent to those addicted smokers. You can argue that with this group there is price in-elasticity of demand since the demand hasn’t waned. In this example, we’re looking at two different groups; the heavily addicted habitual smokers and so-called social smokers. Social smokers while can be described as at a lower level of addiction to nicotine, are far less predictable or reliable for sales. Most claim to not purchase nicotine regularly themselves, but to “bum” a cigarette from their friends while out. The assumption would be that this situation would be more elastic as “social smokers” would be more sensitive to large changes in price and can reduce demand at will.

Answer 1

The post begins with a strong point. It defines price elasticity and discusses the phenomenon of a product such as cigarette. The post clearly points out that the cigarette users can be classified into two categories. Social smokers and the heavily addicted smokers. However, we most likely should not compare social smokers to the concept of social drinking. This is because social smokers are simply people who are not against smoking. This means that they are the neutral group. As a result, we cannot consider the so called “social smokers” as target consumers. Due to this, if we need to analyze the price elasticity of cigarettes and its market, we should purely focus on the heavily addicted smokers. If we do that we understand that the product is pretty inelastic to the price. Other than this, the overall write up is pretty comprehensive. However, purely from literary point of view, the post does not conclude the overall argument. This makes it kind of incomplete.