Question

Through October​ 2014, the U.S. government administered two programs that affected the market for cigarettes. Media campaigns and labeling​ requirements, which are still in​ place, aim at making the public aware of the health dangers of​ cigarettes, and until 2014 the Department of Agriculture also maintained price supports for tobacco. Under this​ program, the supported price was above the market equilibrium price and the government limited the amount of land that could be devoted to tobacco production.

Answer 1

Answer: Placing a price above equilibrium will lead to increase in price and limitation on land use will lead to reduction in supply of tobacco products.

Explanation:

Smoking has many negative impact on the bodyband some of these effects are life threatening. Smoking affects the respiratory organs and increases the risk of cancer and eventually may lead to death.

Government in different countries have put in different methods and policies to reduce smoking. Some of the policies are high tax on tobacco products, ban and enlightenment programmes.

The policies used here such as placing price above the equilibrium price and limiting the amount of land that can be used for tobacco production are good policies. Placing the price of tobacco products above equilibrium price will lead to an increase in price which might discourage people to buy tobacco related products such cigarette. Also, limitation on the land use for tobacco production will lead to decrease in supply. This means less tobacco related products will be available for people.