Are you an addicted smoker?
The Malaysian government has announced the increase of cigarette prices to a record high RM 10.50 in efforts to stop reduce the number of smokers in the country. The increment in the price for a box of cigarettes has gone over the price of what teenagers cannot afford. But it seems that the general public are still smoking, unfazed by the changes. It is proven that
cigarettes have an “inelastic-demand change”
Have
you ever wondered? Why people never quit smoking even when the taxes keeps rising ever so frequently??
According to the studies of economic, there are few
determinants of elasticity of which will cause the smokers to have an
inelastic demand for cigarettes. Here's an example:
- Cigarette addicts would pay any amount for a fix (Habitual)
Habitual smokers will never stop smoking in regards to the price, apart from a ridiculous "cut-throat" amount. So the demand for cigarettes is “inelastic” to prices due to the fact that there wont be much of a change in demand for cigarettes when the price is increased. That is proven when demand is not normally responsive to
changes in prices.- Percentage of income spent
The price of a pack of cigarettes a day is still
affordable for working individuals. 1 pack of cigarettes costs RM10.50 and the total spent for a month is roughly only RM305. The average Malaysian wage is around RM3000. So the
expenses for cigarettes for an average Malaysian is around 10 % to their monthly income. So its not that big of a problem for those who are already addicted to tobacco smoking.
Sources:
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