In chapter 1, the core concept was to grasp the idea on opportunity costs and the law of diminishing returns. They talked about scarcity and how everything is considered scarce, especially natural resources that aren't renewable. We were introduced to graphs which help us determine whether or not prices and products have a positive relationship or a inverse relationship.

November 10, 2006
'Light' and 'mild' labels are to be removed from cigarette packages by 2008. Health officials say that the terms 'light' and 'mild' are deceiving to Canadian smokers who perceive that smoking a 'light' cigarette is better for them, in which case it's not. Tobacco is still as harmful in any type of cigarette, the 'light' label just means a lighter taste. Tobacco companies now have to sign a World Health Organization treaty to agree upon the new terms, so instead of labelling packages with 'light' or 'mild' they must give 'flavors' of some sort.

This article is pretty straight forward, but what does it have to do with Economics you ask? Well lets think about the opportunity cost for the tobacco companies who decided the sign the treaty. In a nutshell, the direct cost would be: having to design a new package and a lot of new promotion to regain customer loyalty. The biggest opportunity cost: the lost of 'light' and 'mild' cigarette smokers which would probably lose the company millions of dollars if these smokers actually believe that 'light' and 'mild' were better for their health in terms of the regular. Tobacco companies are a multi-million dollar industry, and cigarettes are far from scarce. So maybe putting production of any kind of 'light' and 'mild' cigarettes on hold wouldn't even come close to hindering their revenue. The law of diminishing returns states that if you maximize Land, Labour, and Capital your total revenue would actually decrease. So taking a break from making all those other cigarettes, and concentrating on promoting the regular might increase profits for the long run (although, I strongly hope not and wish that the world would smoke-free). You'd think because they have to change their label that the production-possibilities curve would shift to the left due to customers who stop buying the 'light' and 'mild' cigarettes. But no matter how many inhibitors that try to reduce the sale of cigarettes, for example attaching a picture of a smoker's lungs, people just keep on buying cigarettes and nothing seems to be slowing down that rate.

News Article:
http://www.canada.com/montrealgazette/news/story.html?id=a8c00572-5635-48e5-9003-a04ab5996bd8&k=12789


I seriously cannot stand smokers. They pollute our air, harm the people around them, and are basically just digging up their own graves. To be honest, I always thought that 'light' and 'mild' were 'less harmful' cigarettes. Boy, who ever chose those clever words sure had a good long run. Hopefully the removal of these labels would give a reality check to smokers and we'll see the demand for cigarettes to plummet. What's better than more money in your pocket, fresh breath, and cleaner lungs?