Question

Explain with the aid of a diagram the likely impact of an education programme to discourage cigarette smoking on equilibrium price and quantity.

Comment: I have drawn this showing demand shifting downward only. Advice on if this is the result of education required.

Answer 1

An education program to discourage cigarette smoking will emphasize of the adverse health impacts of cigarette smoking.

This information with respect to adverse health impact of cigarette smoking will induce the cigarette smokers to reduce the number of cigarettes they smoke and thus would result in a decrease in demand for cigarettes.

When demand for a good decreases the demand curve shifts leftward or downward.

Following is the required figure -

The above figure shows that education regarding adverse health impact of the cigarette smoking has induced the people to cut back on their smoking endeavors and thus has resulted in a decrease in demand for cigarettes and has shifted the demand curve for cigarettes downward from D to D1.

The new equilibrium is attained at point E1.

The new equilibrium price is $P1 per packet and new equilibrium quantity is Q1 packets.

Thus,

Both equilibrium price and equilibrium quantity has decreased due to an education program to discourage smoking.