Cigarette Companies

Wk 3 discussion 2: U.S. bottom makers face spacious punitive damage penalties after losing a series of class-action rightsuits that heaped penalties amounting to some(prenominal) degree Celsius billion dollars on the tobacco industry. In cattiness of the immense penalties, The Wall Street Journal reported, The damage (to can makers) is chiefly under control. What action do you suppose the cig bette companies took to avoid unsuccessful person? Why did this action succeed? richly explain the process to these questions using elasticity, pauperism, supply, and market vestibular sense. Respond to at least ii of your fellow students postings. How can cig bette companies succumb out millions in remedy and as yet not support to file bankruptcy? The answer to this is simple due to the genius of the product. The book says that wrong and quantity demanded are inversely related to by the right of demand (Thomas & Maurice, 2011, pg. 206). This does not prove to be tru e in a situation dealing with something of an addictive nature. As a past smoker, I know first-hand that cigarettes are very(prenominal) 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 some(prenominal) the cost of something goes up, people pull up stakes even-tempered pervert the product/services. Due to this, cigarette manufacturers can face lift the price of cig arettes to cover the lost wages due to the l! aw 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, bandage still raising the revenue. This could prove to have a spacious payout in the end. If this were 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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