Explain two factors which could lead to an increase in the demand for conventional cigarettes

AQA AS-Level Economics Paper 1 June 2020

Extract E (lines 18–19) states: ‘the growth of e-cigarettes has fallen since, with some smokers switching back to conventional cigarettes.’

Explain two factors which could lead to an increase in the demand for conventional cigarettes.

Demand is the number of goods and services (in this case conventional cigarettes) that people are willing and able to buy at each given price. An increase in demand is the same thing as a right shift in the demand curve, which can be caused by non-price factors. This causes the equilibrium price to increase (the price where demand meets supply).

One factor that could cause an increase in demand for conventional cigarettes is the increasing 'uncertainty about the health effects of e-cigarettes'. Conventional cigarettes and e-cigarettes are substitute goods, which means they are in competitive demand. If the demand for one of them decreases (due to the uncertainty about the health effects), then the demand for conventional cigarettes would increase, and the effect of this is seen below. This is because there are now more people who are willing and able to buy conventional cigarettes especially as some ex-smokers may switch back.

Another factor that could cause an increase in demand for conventional cigarettes is a change in trends, which could also be caused by a change in population demograhics. For example, if there is an increase in the population of people above a certain age, then there are going to be more people who are willing and able to buy conventional cigarettes. This could be partly because it may be more trendy in their social group to smoke compared to younger people, but also in general, if population increases, ceteris paribus, it automatically increases the demand for most goods and services. Therefore, a change in trends or population could also cause a right shift in the demand for conventional cigarettes.