2002South-WesternPublishing.pptVIP

OVERVIEW of Chapter 3 Demand Relationships Demand Elasticities Income Elasticities Cross Elasticities of Demand Appendix 3A: Indifference Curves Health Care Cigarettes Raising cigarette taxes reduces smoking In Canada, $4 for a pack of cigarettes reduced smoking 38% in a decade But cigarette taxes also helps fund health care initiatives The issue then, should we find a tax rate that maximizes tax revenues? Or a tax rate that reduces smoking? Demand Analysis An important contributor to firm risk arises from sudden shifts in demand for the product or service. Demand analysis serves two manag