The Constant Elasticity of Demand for Cigarettes Has Been Estimated

question 81

Multiple Choice

The constant elasticity of demand for cigarettes has been estimated to be 0.5.To reduce smoking by 25%, approximately how much tax needs to be added to a $1 pack?

• A)$.50.
• B)$.75.
• C)$.25.
• D)$.13.
• E)$4.

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Definitions:

Stresses

Psychological or physical strains and pressures that may lead to mental health issues or physical discomfort.

Demoralization

A state of feeling dejected and disheartened, often resulting from persistent failure or inability to achieve goals.

Poverty

A state or condition where an individual or community lacks the financial resources and essentials for a minimum standard of living.

Mood Disorders

Psychological disorders characterized by emotional extremes. See major depressive disorder, mania, and bipolar disorder.