The government plans to increase cigarette taxes in six months. Since consumers should expect the future price of cigarettes to increase, the current demand for cigarettes will increase, and the price of cigarettes will rise even before the tax is implemented.

Question

Quizplus · Accepted Answer

When consumers anticipate a future price increase, they may buy more now to avoid higher costs later, increasing current demand and potentially raising prices before the tax takes effect.

The Government Plans to Increase Cigarette Taxes in Six Months