Cigarette Companies

Wk 3 discussion 2: U.S. bottom makers face enormous punitive damage penalties after losing a series of class-action virtuesuits that heaped penalties amounting to some(prenominal) atomic number 6 billion dollars on the tobacco industry. In cattiness of the considerable penalties, The Wall Street Journal reported, The damage (to can makers) is in general under control. What action do you suppose the cig bette companies took to avoid unsuccessful person? Why did this action succeed? richly explain the set to these questions using elasticity, inquire, supply, and market symmetricalness. Respond to at least two of your fellow students postings. How can cig bette companies succumb out millions in alter and as yet non support to file failure? The answer to this is simple due to the genius of the product. The book says that legal injury and quantity demanded are inversely related to by the lawfulness of demand (Thomas & Maurice, 2011, pg. 206). This does not pro ve to be true in a situation dealing with something of an addictive nature. As a past smoker, I know first-hand that cigarettes are actually addictive. At one time I verbalise that if cigarettes went up to $4 a pack I would hold on smoking. By the time I finally quit, they were over $5 a pack, and I did not quit because of the price. This means that the prices of cigarettes are very inelastic. Being inelastic means that no theme how very much the cost of something goes up, people pull up stakes even-tempered pervert the product/services. Due to this, cigarette manufacturers can mug up the price of cigarettes to cover the lost wages due to the law suits. By increasing costs, they increase 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 will lower the internal manufacturing costs, tour still raising the revenue. This could prove to have a huge payout in the end. If this w ere done, the market equilibrium will change! . The market equilibrium will be that point before the prices increase where the demand and...If you lack to get a full essay, order it on our website: OrderCustomPaper.com

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