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Unformatted text preview: demand for (i) business travelers and (ii) vacationers? (Use the midpoint method in your calculations) b. Why might vacationers have a different elasticity from business travelers 8. Consider public policy aimed at smoking. a. Studies indicate that the price elasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently costs $2 and the government wants to reduce smoking by 20 percent, by how much should it increase the price? c. If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking 1 year from now or 5 years from now? d. Studies also find that teenagers have a higher price elasticity than do adults. Why might this be true?...
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This note was uploaded on 09/15/2009 for the course ECON 201 taught by Professor Shoonlai during the Summer '09 term at Miami University.
- Summer '09