What Does the Following Statement Imply About Price Elasticity of Demand

question 83

Multiple Choice

What does the following statement imply about price elasticity of demand? "Government tries to reduce cigarette consumption with an extra 50 cent tax per pack.Policy raises government revenue but fails to curb smoking."

• A)demand for cigarettes is elastic
• B)demand for cigarettes is inelastic
• C)elasticity of demand for cigarettes is equal to one
• D)elasticity of demand for cigarettes is close to infinity
• E)elasticity of demand for cigarettes equals 0.5

---

Definitions:

Mutuum

An ancient legal term referring to a loan agreement where one party agrees to lend something that must be returned in kind and quantity, typically involving consumables.

Sole Benefit

refers to the principle that an action or decision must be made with the intention of benefiting only the specified individual or entity, not others.

Antique Wedding Ring

A vintage ring, often passed down through generations, that may hold historical, emotional, or financial value, used symbolically in marriage ceremonies.

Depression

A significant and persistent period of negative mood, accompanied by various symptoms that can affect a person's thoughts, behavior, feelings, and sense of well-being.