Suppose the State of New York Imposes a One Dollar

question 30

Multiple Choice

Suppose the state of New York imposes a one dollar per pack tax on cigarettes, which increases their price by 30 percent, and as a result, the quantity sold declines by 20 percent. The price elasticity of demand for cigarettes is equal to

• A) − 0.20.
• B) − 0.67.
• C) − 1.50.
• D) − 3.00.

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