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Old March 12th, 2009, 09:34 PM
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Default Re: new tobacco taxes?

Originally Posted by Hajo Flettner View Post
The thing is that's not how it will end up. An increase in the wholesale cost will end up in addition to a corresponding increase in the retail price. To make matters worse, higher prices mean less sales which means that retailers will end up charging more to offset lower sales volumes. I would say that the chances of the prices only going up an additional $4 per kilo are about zero.
this goes against basic economic theory. the less demand, the lower the price. doesn't even make sense logically, if the demand is low, and you charge more, the demand will continue to drop.
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