Summative Assessment Task 2: Essay This assessment task is designed to cover material from Topics 1-6. Due date: Friday 27th April XXXXXXXXXX:00pm. Word Limit: 2000 words All essays must be submitted...

Topic 1:
Introduction:
The growing use of tobacco and the prevalence of tobacco related diseases and premature death is a wo
ying concern today not only in United states but across the world. Smoking is associated with premature death, loss of productivity and huge cost burden to heath care system. (NHS, 2015) In addition to its hazardous effects on heath and cost implications, smoking is a very expensive habit. An average household with a smoker spends $1000 annually on smoking in United states. The economic burden of smoking is growing at a rapid pace across the world. (Peter Boyle, 2010)Tobacco control intervention like excise tax is beneficial across the income and age group as it is associated with greater health and economic benefits. (Bishwa B. Adhikari, 2012)
It has been estimated that 480,000 people die due to tobacco use that costs the nation approximately $300 billion. Cigarette smoking is the predominant cause of lung cancer, heart attack, chronic
onchitis and many other dreadful diseases. (Wolfson, 2017)Given the significant health impact and is associated financial burden, considerable amount of research has been conducted to understand the economic and behavioural determinant of smoking. (Hovhannisyan, 2016)
Today cigarette tax is one of the key public policy instrument to fight against smoking and smoking related diseases. (Priceconomics, 2016)
Price elasticity of demand for cigarettes:
The fundamental economic theory states that an increase in price leads to reduce the quantity demanded. (Glenn Hu
ard, 2012)But this basic economic relation is not much strong for cigarettes and other tobacco related products. This is because Tobacco is not like many other products. It is addictive and does significant harm not only to users but others in the society. (Peter Boyle, 2004)Cigarette users are not much responsive to price changes. In economic terminology, Cigarettes are price inelastic. Price elasticity shows how much the demand changes followed by a change in price. (Mankiw, 2014)The lack of alternatives and addictive nature of the product are primary factors that would make the demand inelastic for cigarettes and other tobacco related products. Since it is price inelastic, the tobacco industry is likely to pass on the major share of tax burden to the consumers. While the excise tax is imposed on cigarettes, higher price has to be paid by the consumers. (Perucic, 2012)
The study conducted and published in 2011 by international Agency for Research on Cancer has confirmed that average price elasticity of demand for cigarettes in high income countries is -0.4. But the estimate for U.S and U.K falls in the range between -0.2 and -0.6. (tobaccoinaustralia, 2018)
Price elasticity of demand for non – cigarettes tobacco products:
Various methods are used to measure the price elasticity of demand for tobacco products. Mohammed Jawad (2018) have estimated price elasticity of demand for other tobacco products. They have conduct random effects for meta-analysis for other products that yields 125 elasticity estimates for 15 countries. Their study has observed a 10% increase in price would reduce the demand for cigars by 8.3%, for roll of own by 6.4%, for bidis 5.7% and smokeless tobacco by 2.1%. The results from other studies that estimate the cross-price elasticity suggest that the substitution effects between cigarettes and non-cigarettes to tobacco products are positive. The study observed sufficient evidence to support effectiveness of price rise for non-cigarettes tobacco products just like cigarettes. Positive substitutability between cigarettes and other tobacco products strongly suggest that the tax induced price rise must be simultaneous and comparable across all the tobacco related products. (Mohammed Jawad1, 2018)
Price elasticity of demand varies across time:
Price elasticity of demand for cigarettes changes over time. As time goes, people adjust with price changes and reduce the consumption. The demand is found to inelastic in the short run but gradually the elasticity becomes higher in the long run. (Organization, 2010). Price elasticity of demand substantially varies across the research studies. Temporal factors may explain such variation in the estimate but the differences in the research methods used to estimate the elasticity is also very important. (Lyon, 1968)
Price elasticity of demand varies across income and age:
Price elasticity of demand substantially varies across the population groups. Price elasticity of demand is estimated as -0.4 in high income countries. It implies a 10% increase in price of cigarettes will lead to reduce the consumption by 4%. For middle and...