... that as price rises from PO to P1 then demand goes down from DO to D1. However, evidence1 shows that demand for cigarettes over the years 1971-1981 has gone up, hence, contradicting economic theory. The economic theory about income assumes cigarettes are a normal good. If cigarettes were an inferior good it would mean that as a person's income went up then their demand for cigarettes will go down. Income elasticity of demand measures the effect on the demand for cigarettes. This demonstrates that when all other things remain equal, ceterus paribus, and only the person's income goes up then the demand for cigarettes will also go up. Other independent variables that describe the determinants of demand may be fashion and compliments. Consumers may smoke because it is what everybody else is doing, or even that celebrities are doing it. It is believed that models smoke to keep themselves thin therefore it ...

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