Studies Indicate That the Price Elasticity of Demand for Cigarettes

question 250

Multiple Choice

Studies indicate that the price elasticity of demand for cigarettes is about 0.4.A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6.According to the midpoint method,the government policy should have reduced smoking by

• A)30%.
• B)40%.
• C)80%.
• D)250%.

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Definitions:

Asset Sold

The process of transferring ownership of a business resource, which could be tangible or intangible, from one entity to another, usually in exchange for cash or its equivalent.

Unrealized Gain

An increase in the value of an asset or investment that has not yet been sold and thus, the gain has not been realized as actual profit.

Consolidated Financial Statements

Financial statements that show the financial results and position of a parent company and its subsidiaries as if they were a single entity.

Wholly Owned Subsidiary

A firm entirely possessed by another corporation, known as the parent company, holding all of its share capital.