Government introduces a new tax on production of cigarettes causing hike prices. What impart it will have on different sets of consumers ? What is the rationale behind imposition of tax by the government ?

Government introduces a new tax on production of cigarettes causing hi

1.	Government introduces a new tax on production of cigarettes causing hike prices. What impart it will have on different sets of consumers ? What is the rationale behind imposition of tax by the government ?
Answer» <html><body><p></p>Solution :<a href="https://interviewquestions.tuteehub.com/tag/since-644476" style="font-weight:bold;" target="_blank" title="Click to know more about SINCE">SINCE</a>, cigarette smoking is injurious to health, government has imposed this tax with a vew to discourage the <a href="https://interviewquestions.tuteehub.com/tag/demand-436956" style="font-weight:bold;" target="_blank" title="Click to know more about DEMAND">DEMAND</a> of cigarettes among consumers. However the imposition of this tax would be dfferent on different sets of consumers.<br/> Demand would fall for those consumers whose demand for cigarettes is <a href="https://interviewquestions.tuteehub.com/tag/elastic-967540" style="font-weight:bold;" target="_blank" title="Click to know more about ELASTIC">ELASTIC</a>. <br/>Demand would not change for those consumers who are habituated towards it implying <a href="https://interviewquestions.tuteehub.com/tag/inelastic-7382420" style="font-weight:bold;" target="_blank" title="Click to know more about INELASTIC">INELASTIC</a> demand for <a href="https://interviewquestions.tuteehub.com/tag/cigaretters-2516298" style="font-weight:bold;" target="_blank" title="Click to know more about CIGARETTERS">CIGARETTERS</a>.</body></html>