Consider the demand for cigarettes. Suppose the government decreases the price of cigarettes by lowering cigarette taxes. How will this affect the demand for cigarettes over time? If the price of cigarettes decreases, then the quantity of cigarettes demanded will A. increase, but this effect will likely become smaller (in absolute value) over time. B. likely never change either initially or over time. C. decrease, and this effect will likely tiecome larger (in absolute value) over time. D. increase, and this effect will likely become larger (in absolute value) over time. E. increase, and this effect will likely remain constant over time.

If the government lowers cigarette taxes, leading to a decrease in price, the quantity demanded for cigarettes is likely to increase initially as consumers are incentivized to purchase more due to the lower cost. Over time, however, the initial surge in demand may diminish as some consumers become aware of health risks or as social norms shift against smoking, making the effect smaller (answer A). However, it’s essential to consider that habitual smokers may not reduce their consumption even if prices drop. New smokers may be attracted by the lower prices, leading to an increased long-term demand among specific demographics, but the overall demand response may stabilize as consumers adjust (answer E). So while both A and E have merit, many factors could influence the trajectory of demand over time.