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The Elasticity Classic - Smoking

Jim Riley

9th March 2011

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This has to be the most widely used example in classrooms up and down the country when discussing price elasticity of demand.

How about this little twist on it?

The standard argument goes that the PED for smoking is relatively inelastic, but is this the case for all smokers?

Show this Sky News story (includes a video clip) to your class and you will be able to discuss how the PED for a committed smoker may actually be different to that of a young person who is considering taking up smoking.

There is also the opportunity to reinforce the areas of price creating movements along curves and all other factors causing shifts.

Link to the story

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Jim Riley

Jim co-founded tutor2u alongside his twin brother Geoff! Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs.

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