Readers Question: Using data and your economic knowledge assess the case for and against a government completely banning the sale and consumption of cigarettes. AQA (15)
1. Cigarettes are a demerit good. People underestimate the costs of smoking, e.g. lower life expectancy. It has been suggested that the true cost of a packet of cigarettes is over $200. Therefore, the government is justified to try and stop people consuming goods which harm them.
2. Cigarettes have negative externalities on the rest of society. For example, it creates health problems of passive smoking. This leads to over consumption and is another justification for banning smoking.
3. Tax is insufficient for reducing consumption of cigarettes. Demand is very price inelastic because people become addicted. Therefore, banning cigarettes may be the only way to reduce consumption.
