Bsb113 Economics Essay

1496 Words Dec 21st, 2015 6 Pages
Research Summary


Research Summary

BSB113
BSB113
Tutor: Thamarasi Kularatne
Tutor: Thamarasi Kularatne
Student Number: N9138587
Student Number: N9138587
Carson Ly
Carson Ly
Due Date: September 26 2014 ndjdcjjdjdj2012012222014
Due Date: September 26 2014 ndjdcjjdjdj2012012222014

Smoking is recognised as the largest single preventable cause of death and disease in Australia. It is associated with an increased risk of heart disease, stroke, cancer, emphysema, bronchitis, asthma, renal disease and eye disease. Tobacco contains the powerfully addictive stimulant nicotine, which can make smoking a regular and long-term habit that is not easy to quit (Australian Bureau of Statistics, 2014). Statistics show
…show more content…
The consumption of cigarettes has reduced over the years by 6.8%. In 2012, 17.4% of Australia were recorded as smokers (Heart foundation, 2012). This reduction is caused by the increase of price over the years, as the price increases, the demand for cigarettes decreases. Figure 1 shows the smoking rates of the years 2001-2012.
Figure 1
Figure 1

The amount of smoking of cigarettes is decreasing in Australia. This is because of the tax increase of cigarettes in Australia, which then increases the price. Therefore the demand for cigarettes decreases whilst the supply stays the same. Due to the price increasing, the amount of cigarettes sold will decrease. Using this information a supply demand graph can be constructed. If the price were to decrease the demand for cigarettes would increase, causing a shift to the right, but because this is not the case, there is instead a shift to the left. Figure 2 shows the shift to the left causing efficient equilibrium.
Figure 2
Figure 2

Efficient equilibrium
Efficient equilibrium

Price
Price
S2 S1

P2
P1

D
Quantity
Quantity
Q2 Q1

There are a couple strategies to get an efficient equilibrium. One of these strategies being price floor, due to the fact that Australia will never have 0% of smokers in Australia, and also because…

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