It Has Been Estimated That the Price Elasticity for Cigarettes

question 59

Multiple Choice

It has been estimated that the price elasticity for cigarettes is 0.164. Assuming there are currently no taxes on cigarettes, to reduce cigarette purchases by 5 percent, the government would need to tax cigarettes enough to:

• A) raise the price by 0.82 percent.
• B) lower the price by 0.82 percent.
• C) raise the price by 30.5 percent.
• D) lower the price by 30.5 percent.

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Definitions:

Psychological Treatment

The use of psychological methods, particularly when based on regular personal interaction, to help a person change behavior and overcome problems in desired ways.

Cancer Treatment

Medical strategies used to combat cancer, including surgery, chemotherapy, radiation therapy, and immunotherapy, aimed at eradication or control of cancer cells.

Medication

Drugs or other forms of medical treatment used to relieve or cure illness and improve health.

Type B Personalities

A personality typology that is characterized by a more relaxed, less competitive approach to life, in contrast to the more stress-prone Type A.