CIGARETTES: A Supply & Demand Analysis

Explain and graph the effects on the cigarette market of the items listed below. Show which curve(s)
shift and in which direction. Also indicate whether the effects on equilibrium price and on
equilibrium quantity are an increase, a decrease, or indeterminate.
1. Marketing strategies by tobacco companies that portray cigarette smoking as glamorous.

2. Findings that cigarettes are hazardous to the health of smokers. (Note: The U.S. Surgeon
Generals report that stated that heavy smoking was the principal cause of lung cancer was issued
in 1964. The first medical researcher to publish a paper linking tobacco with cancer dates back
to 1761.)

3. Technological advances that reduce the cost of manufacturing cigarettes.

4. Excessively wet weather that damages the tobacco crops.

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5. Both 1 and 3 above.

6. Both 1 and 4 above.

7. Both 2 and 3 above.

8. Both 2 and 4 above.

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