Topic : Cigarettes prices in UK XXXXXXXXXXKey questions you would like to answer using Prices and Markets concepts learned (not more than 3 questions)Why does cigarettes prices in Singapore change?Who...

Cigarette market in UK    
Contents
Introduction    3
Analyzing how cigarette price changes:    3
Reason behind the price change    4
Identifying who gains and who loss due to a price change    5
Identifying who gains due to a price change    5
Tax on small groups:    5
Revenue generator for government    6
Identifying who loss due to a price change    6
Revenue Loss for manufacturer:    6
Welfare analysis of tax on cigarette    6
Limitation of government intervention    7
Conclusion:    8
References    10
Introduction
Tobacco levy and price rises are the most cost-effective way to cu
tobacco consumption. This, in combination with other tobacco control policies such as advertising bans and outdoor smoking bans, helps to ensure that tobacco control market reduction measures are successful. Price rises on tobacco are highly successful in decreasing demand in countries at all income classes, according to evidence. Higher prices inspire people to quit smoking and discourage them from starting. They also minimize relapse among former users and usage among cu
ent users. In this report we focused on analyzing the cigarette market price change by using various microeconomic concepts. First we look into how the price of cigarette changed over the years from Feb 1987 to May 2018. Secondly we will focus on the reason behind the price change. Next we focused on analyzing whether the cigarette market requires price change.
Analyzing how cigarette price changes:
Source: The Sun
From above graph we can see that the average price of a packet of king size cigarettes in the UK in Feb 1987 was below £2.50 and this continuously increased over the period of time. Average price of cigarette was above £10.
The Tobacco Control Study Group examined sales statistics for three years, from May 2015 to April 2018, and discovered that cigarette sales dropped by an average of 12 million per month prior to regulation, but dropped by a sharp 20 million per month following regulation.
Reason behind the price change
The United Kingdom was the world's second country to introduce standardized packaging for tobacco, and the first to provide detailed market statistics to analyze the effects. A new levy on cheaper cigarettes (the minimum excise tax - MET) was imposed at the same time as standard packaging was completely applied, in May 2017.
A specific duty of £196.42 per 1,000 cigarettes and an ad valorem fee of 16.5 percent of the Recommended Retail Price make up the tobacco tax. In addition, VAT is paid. The average duty burden on smokers increased by 50% between 2010 and 2016, whilst it increased by 60% in the case of hand rolling tobacco. Excise sales were more than £2 billion which is than expected over the same time. Government received tax receipts of £12 billion. The selling of tobacco goods produced £9.5 billion in excise duty and £2.5 billion in VAT in...