Related to the Economics in Practice on Page 108: Which

question 63

Multiple Choice

Related to the Economics in Practice on page 108: Which of the following, if true, would support the argument for raising cigarette taxes even if the price of cigarettes has relatively little impact on adults' cigarette consumption?

• A) The health risks of cigarette smoking are affected by the amount of nicotine in cigarettes as well as the number of cigarettes smoked.
• B) When cigarette taxes vary between neighboring states, people have an incentive to buy cigarettes in the state with lower taxes.
• C) Illness due to smoking is a significant cause of lost economic productivity.
• D) The demand for cigarettes is more elastic for underage smokers as compared to that of adult smokers.

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Definitions:

Discontinuance

This term refers to the cessation of operations or activities in a specific business segment or location.

Sunk Cost

A cost that has already been incurred and cannot be recovered.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset up to a specific point in its life.

Total Cost Concept

An approach that considers all variable and fixed costs associated with the production of goods or services.