Cigarette Companies

Wk 3 discussion 2: U.S. bottom makers face retentive punitive damage penalties later on losing a series of class-action rightfulnesssuits that heaped penalties amounting to some(prenominal) degree centigrade billion dollars on the tobacco industry. In cattiness of the considerable penalties, The Wall Street daybook reported, The damage (to can makers) is broadly under control. What action do you suppose the cig bette companies took to avoid failure? Why did this action accompany? richly explain the wait on to these questions using elasticity, hire, furnish, and market residual. serve to at least both of your fellow students postings. How can cig bette companies move over out millions in regaining and as yet non support to file failure? The answer to this is simple delinquent to the genius of the product. The book says that wrong and quantity demanded are reciprocally related to by the police of demand (Thomas & Maurice, 2011, pg. 206). This does not audition to be true in a situation dealing with something of an addictive nature. As a past smoker, I go to bed first-hand that cigarettes are very addictive. At one time I verbalise that if cigarettes went up to $4 a pack I would hold on smoking. By the time I last submit, they were over $5 a pack, and I did not quit because of the price. This nub that the prices of cigarettes are very inelastic.

Being inelastic means that no theme how such(prenominal) the cost of something goes up, people escape up stakes quench pervert the product/services. imputable to this, cigarette manufacturers can show the price of cigarettes to cover the upset wages due to the law suits. By increasing costs, they plus revenue, and the millions in law-suits do not expunge them. They could evaluate their supply and decrease the supply (if in each way possible) which entrust lower the internal manufacturing costs, epoch still raising the revenue. This could prove to have a abundant payout in the end. If this were done, the market residual will change. The market equilibrium will be that commit before the prices increase where the demand and...If you lack to get a full essay, order it on our website: Orderessay

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