Tabacco Economic Factors

Although the tabacco industry is one of most successful economic operations, tabacco products are associated with the most deaths more than any other product (1). The consumption of tabacco leads to numerous fatal diseases such as lung cancer, heart disease, stroke, chronic respiratory disease, and other conditions and approximately 4.2 million Canadians are smokers as of 2015 (4). The consumption of tabacco also has an economic impact of $17 billion dollars in annual social costs including $4.4 billion in direct health care costs (5). First the article will discuss the health consequences of smoking and recent global trends. Subsequently we will examine and analyze relationships between tabaco and several economic factors such as price, consumption and taxation as well as the behavioural perspective of smoking. Following the application of economic theories will be an econometric analysis of the influences of tabaco
However in more recent research, economists believe that there is a market correlation between price and consumption. Although the price may be the most crucial component of a consumer’s decision-making process, there are still many complexities in determining the demand for tabacco. The age restriction for example, is a limiting factor for minor’s expenditure on tabaco-related commodities. Factors such as income, advertising and the availability of products and elements such as time and smoking areas regulations can also contribute to the demand. Cigarettes have typically been perceived as a normal good, implying that cigarette consumption increases analogous to the rise in income. Although more recent studies suggest that cigarettes have developed into an inferior good in industrialized countries, signifying that consumption declines as the individual’s income