Question

During the Great Plague of 1665 in London, medical experts claimed that smoking tobacco would prevent a person from catching the disease. Even school children were ordered to smoke during class, and one boy at Eton was whipped for refusing to smoke.What effect did this have on the market for tobacco? Use a supply and demand diagram to explain.(15%)

Answer 1

During the Great Plague of 1665 in London, medical experts claimed that smoking tobacco would prevent a person from catching the disease.

As a result, citizens of London would've started to demand more tobacco because of its health-related benefits as claimed by the then medical experts.

It, therefore, will cause an increase in demand, and hence the demand curve for tobacco will shift towards the right and will result in

• An increase in the equilibrium price ( from P₀ to P₁in the figure given below ) along with
• An increase in the equilibrium quantity ( from Q₀to Q₁  in the figure given below  )

Therefore, during the Great Plague of 1665 in London, this health-related claim by the medical experts would've resulted in a rightward shift of the demand curve for tobacco from D to D₁

As a result, we would've had -

• An increase in the amount of smoking tobacco ( from Q₀ to Q₁  in the figure shown above )
• An increase in the price of tobacco ( from P₀ to P₁  in the figure shown above )