Suppose the State of Colorado Imposes a One Dollar Per

question 5

Multiple Choice

Suppose the state of Colorado imposes a one dollar per pack tax on cigarettes, which increases their price by 30 percent, and as a result, the quantity sold declines by 20 percent. The absolute value of the price elasticity of demand for cigarettes is equal to

• A) 0.20.
• B) 0.67.
• C) 1.50.
• D) 3.00.

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Definitions:

Economic Policy

The strategies and actions taken by a government to manage the economy and influence economic conditions including taxation, government budgets, and interest rates.

Loopholes

Provisions or omissions in laws, taxes, or contracts that allow individuals or entities to avoid or circumvent their intended effect, often leading to exploitation.

Businesses Behavior

The patterns, practices, and ethical decisions made by companies in the pursuit of their objectives, including how they interact with their stakeholders, the environment, and the economy.

Standing to Sue

The legal right of an individual or entity to initiate a lawsuit, contingent upon having a sufficient connection to and harm from the law or action challenged.