The situation where Arizona increases the tax on vapes, and smokers respond by purchasing their vapes in surrounding states, best illustrates the economic principle that people respond to incentives. When the cost of buying vapes in Arizona rises due to higher taxes, consumers are incentivized to seek cheaper alternatives outside the state, demonstrating how changes in costs influence behavior
. This principle reflects how individuals alter their decisions based on changes in costs and benefits, a fundamental concept in economics explaining consumer behavior in response to tax policies.
