The Price Elasticity of Demand for Cigarettes Is 0

question 465

Multiple Choice

The price elasticity of demand for cigarettes is 0.4. If government wants to reduce smoking by 10 percent, by how much should it raise the price of cigarettes by imposing a tax?

• A) by 10 percent
• B) by 20 percent
• C) by 25 percent
• D) by 50 percent

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Definitions:

Mackay Doctrine

A principle from U.S. labor law allowing employers to permanently replace striking workers under certain conditions, established in the case NLRB v. Mackay Radio & Telegraph Co.

Perfect Information

A scenario in economics where all parties have access to all relevant information about a transaction, market, or event before it occurs.

Strikes

Work stoppages initiated by employees as a form of protest against terms of employment or to demand better wages and conditions.

Secondary Boycott

A form of protest by workers refusing to deal with companies that do business with another company involved in a labor dispute.