According to Ministry of Health nearly 16% or close to 550,000 of the adult population smoke on a regular basis. And smoking kills! Somewhere around 50% of smokers should expect to die from a smoking related disease.1 Perhaps for that reason the Government in March 2011 adopted the Smokefree 2025 goal for New Zealand. The new health minister remains committed to the Smokefree goal but with approximately 550,000 regular cigarette consumers and less than 4 years left to reach his goal Hon Dr David Clark needs your help:
Use the tools from Economic Choice Theory to explain how cigarette taxes can affect cigarette purchases. You are expected to provide at least one concrete example using our standard graph including a budget line, and indifference curves from clearly identified preferences or a specific type of utility function.
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