Advanced Placement (AP)

George Harper

2 November, 00:04

In 2009 the federal excise tax on cigarettes was raised. In response, the CDC noted that " ... because low-income groups are more responsive to price increases, increasing the real price of cigarettes can reduce cigarette consumption among low-income smokers by a greater percentage than among higher-income smokers, and thereby diminish socioeconomic smoking disparities." This quote by the CDC implies what economic outcome? A) The increase in the excise tax will have a greater impact on higher income smokers. B) The decrease in the federal excise tax on cigarettes will have a net impact of increasing the tax revenue for states. C) The increase in excise tax will work as a positive incentive towards bringing in greater tax revenue from cigarette purchases. D) The increase in excise tax will work as a negative incentive for lower income groups who smoke, thus lowering the rate of smokers in this group.