Studies Indicate That the Price Elasticity of Demand for Cigarettes

question 170

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 percent.
• B)40 percent.
• C)80 percent.
• D)250 percent.

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