Elasticity of Supply in the Tobacco Industry!

"A hazy future for tobacco"  (There were two sub-articles under this heading.)
"E-cigarettes grow popular, forcing farmers, firms to adjust" by Jay Price
The Daily Press
April 1, 2014


The tobacco industry is changing in a major way.  The profits of traditional cigarette companies have fallen at the advent of the e-cigarette.  Now, traditional cigarette companies are scrambling to keep up with the competition.  Many are choosing to to sell e-cigarettes of their own.  The company Lorillard purchased the e-cigarette company Blu for almost $135 million in 2012.
There is concern about the safety of e-cigarettes, however.  The liquids (known as e-liquids) that are combusted inside the chamber of an e-cigarette contain nicotine, a highly addictive chemical.  A recent New York Times story covered an increase in calls to Poison Control Centers linked to e-liquids.  Over the past year, these calls have tripled to 1,351 across the nation.  Though many people have been made sick, only one death has occurred (in 2011, a man injected himself with nicotine).  In large amounts, nicotine can be fatal.  Another danger of e-cigarettes is the possibility of children finding vials of the e-liquid and drinking it.  The e-liquids often come in flavors that could be tempting to children.  Imbibing this liquid could have extreme adverse affects on a child.  Proponents of e-cigarettes say that the benefits outweigh the risks though—they have helped many people to quit that would not have been able to otherwise.

This aside, tobacco farmers are affected by the shift away from traditional cigarettes.  Previously, tobacco was bred to maximize traits like taste and leaf quality.  These traits are not as important for the production of e-liquids.  When tobacco is grown for this purpose, the focus is on maximizing nicotine content.

This is where elasticity of supply comes in!  Since it isn't very difficult for tobacco growers to start producing tobacco with lots of nicotine (grower Loren Fisher says he thinks it will be "relatively easy"), the tobacco growing industry has a fairly elastic supply.  It isn't very hard for producers to shift their production in response to this altered market.



And in other news...
ZAPITALISM!!!!!!

The Union boss gets sassy: