Suppose the price elasticity of demand for cigarettes is -0.45 and that Malaysians purchase about 18 billion cigarettes
Posted: Sun May 08, 2022 9:22 am
Suppose the price elasticity of demand for cigarettes is -0.45 and that Malaysians purchase about 18 billion cigarettes a year.
(a) If the tax on cigarettes were increased enough to raise the price of cigarettes by 40%, what would be the effect on the quantity of cigarettes demanded?
(b) Is raising the tax on cigarettes a more effective way to reduce smoking if the demand for cigarettes is elastic or if it is inelastic? Explain with the use of supply and demand analysis.
Please provide correct answer, I am posting in again.
(a) If the tax on cigarettes were increased enough to raise the price of cigarettes by 40%, what would be the effect on the quantity of cigarettes demanded?
(b) Is raising the tax on cigarettes a more effective way to reduce smoking if the demand for cigarettes is elastic or if it is inelastic? Explain with the use of supply and demand analysis.
Please provide correct answer, I am posting in again.