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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Definitions:

Morphine

A potent opiate analgesic drug derived from the opium poppy, used to treat severe pain.

Codeine

An opiate used to treat pain, as a cough suppressant, or occasionally in the treatment of diarrhea.

Neurotransmission

The process by which nerve cells (neurons) communicate with each other through the exchange of chemical messengers called neurotransmitters.

Amplitude

The height of a wave crest, used (in the case of sound waves) as a measure of sound intensity.