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 become 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.

The demand for cigarettes is quite sensitive to price changes, especially given their status as addictive goods. When the government decreases the price by lowering taxes, it effectively makes cigarettes more affordable. In the short term, the quantity of cigarettes demanded is likely to increase as more people may start smoking or current smokers may buy more. However, this effect can diminish over time as habitual smokers may reach a saturation point, making option A the most appropriate choice. Over time, the demand curve can shift as social attitudes change or as public health campaigns highlight the risks of smoking. This could lead to a decrease in demand for cigarettes despite the lower price, especially among younger demographics who may reconsider taking up the habit altogether. Therefore, while the initial reaction to price decreases can lead to a rise in quantity demanded, the long-term effects may show a more complex picture.