According to One Study, the Price Elasticity of Demand for Cigarettes

question 442

Multiple Choice

According to one study, the price elasticity of demand for cigarettes is 0.25. To decrease the consumption of cigarettes by 8 percent, a tax on cigarettes must raise the price of cigarettes by

• A) 32 percent.
• B) 25 percent.
• C) 2 percent.
• D) 3.1 percent.

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