If the Elasticity of Demand for Cigarettes Is 0

question 24

Multiple Choice

If the elasticity of demand for cigarettes is 0.4, then an increase in the price of a pack of cigarettes from $1.00 to $1.30 would reduce quantities demanded by about

• A) 27 percent.
• B) 40 percent.
• C) 12 percent.
• D) 95 percent.

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Definitions:

Ordinary Course

Activities that are considered normal, customary, or usual for a business under certain conditions.

Security Interest

A legal right or security interest on assets that have been offered as a guarantee, typically for the purpose of ensuring the repayment of borrowed money.

Secured Creditor

A lender that is granted a specific property interest as collateral for a loan, giving the creditor a right to repossess the property if the loan is defaulted.

Disposition

The act of transferring or disposing of an asset or property, or the manner in which someone is inclined to behave or feel.