Chrome Flle Edit View History Bookmarks People Window Help https://ng.cengage.co

Question

Chrome Flle Edit View History Bookmarks People Window Help https://ng.cengage.com/st Id 587221232711457609100 57367&e SBN 9781 1& MINDTAP ouch W5- Chapter 05-Problems & Applications Attempts: | 1.7 13 6. Problems and Applications 910 Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.4 Keep the Highest: 1.7/3 if a pack of dgarettes currently costs $5 and the government wants to reduce smoking by 20%, t should ncrease the pnce by than the effect 5 years If the government permanently increases the price of cigarettes, the effect on smoking 1 year frem now will be from now Studies also find that teenagers have a higher price elasticity of demand than do adults Which of the folowing statements are consistent with this result? Check all that apply smalier larger Adults are more likely to be addicted to dgarette. It is legal for adults to consume alcohol, so many choose to spend their money on that Teenagers do not have as much income as adults, so they are more price sensitive. good rather than cigarettes. Coninus without saving 26

Explanation / Answer

1. Percentage increase in price = proportionate change in quantity / price elasticity of demand.

= 20/0.4

= 50%

2. Larger.

If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be larger than the effect 5 years from now.

Because with the current trend, when the government increases the price of cigarettes, people will restrain from consuming cigerattes now.

And they will never return back to using it again after five years from now and they loose their addiction.

3. Option a, c.

Adults are more addicted to cigerattes.

So this increases the quantity demanded of cigarettes even when the price increases.

As teenagers do not have much income as adults, they are more price sensitive.

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.