The consumption of tobacco and cigarette advertisements is an age-old problem across the world. The new concern is based on the high rate at which young people are adopting this bad habit. Now more than ever it has become a serious health risk, not only for smokers but also for young people. Cigarette use has many significant negative externalities related to consumption and has been criticized for decades. The figure below shows the extent to which tobacco consumption affects society through its externalities which add to public/social costs. The graph clearly shows that the marginal social benefits curve is far below that of the marginal private benefits. It also shows that with the addition of a tax, the quantity of cigarettes consumed decreases dramatically and the price of a pack increases. (Q1 decreases to Q2 and P1 increases to P2) Only now the government resorts to reform in cigarette production as a way to reduce demand. This reduction in demand would push the demand curve back and, in turn, reduce the supply of tobacco. This act has been much debated...