Cigarette smoking is injurious to health. How can the government reduce it consumption but onlythrough the normal market forces. Explain the chain of effects of government's action.

Cigarette smoking is injurious to health. How can the government reduc

1.	Cigarette smoking is injurious to health. How can the government reduce it consumption but onlythrough the normal market forces. Explain the chain of effects of government's action.
Answer» SOLUTION :Government can impose HEAVY taxes in production of cigarette. Given price, producers' supply "decreases". This creates EXCESS demand leading to COMPETITION between buyers. Price starts RISING. As a result demand starts falling and supply rising till a new equilibrium is established but only at a higher price leading to fall in consumption of cigarette.