What is a sumptuary tax? Give an explanation for how cigarette ...

[HCHenry]

What is a sumptuary tax? Give an explanation for how cigarette taxes could be justified as a sumptuary tax. Give an explanation for why cigarette taxation might not, in actuality, achieve the goal of sumptuary taxation.
 
  What will be an ideal response?

Question 2

Repealing a tariff will likely
 
  A) increase the quantity produced domestically, increase the quantity purchased domestically, and reduce the price charged domestically.
  B) reduce the quantity produced domestically, increase the quantity purchased domestically, and reduce the price charged domestically.
  C) reduce the amount produced abroad, reduce the price domestically, and reduce the quantity purchased domestically.
  D) increase the amount produced abroad, increase the price domestically, and reduce the quantity purchased domestically.

[kaillie]

Answer to Question 1

A sumptuary tax is a tax designed to discourage the consumption of the good being taxed. One possible justification for cigarette taxation as a sumptuary tax is that the consumption of cigarettes by some individuals makes others worse off and thus society wants to discourage the consumption of cigarettes. If the goal is to discourage consumption of cigarettes, a tax on cigarettes is unlikely to discourage consumption very much given the inelastic demand curve for cigarettes. This means a sumptuary tax on cigarettes is unlikely to reduce consumption very much, thus not achieving the sumptuary taxation goal.

Answer to Question 2

B