If the Elasticity of Demand for Cigarettes Is 0

question 24

Multiple Choice

If the elasticity of demand for cigarettes is 0.4, then an increase in the price of a pack of cigarettes from $1.00 to $1.30 would reduce quantities demanded by about

• A) 27 percent.
• B) 40 percent.
• C) 12 percent.
• D) 95 percent.

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Definitions:

Share Profits

The division of net profits among the shareholders or partners of an organization.

Losses

Financial reductions or negative outcomes typically resulting from expenses surpassing revenues or due to the decrease in value of an asset.

Limited Liability Company

A corporate configuration that unites the straightforward tax treatment of sole proprietorships or partnerships with the limited personal liability characteristic of corporations.

Unincorporated Business Association

A group engaged in business without the formalities and legal protections of incorporation, such as partnerships or sole proprietorships.