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Unformatted text preview: The Maryland State Government hopes to reduce smoking among teenagers by 60% by raising the tax on cigarettes. (a) By what percent would the price of cigarettes have to increase in order to achieve this goal? (b) By how much would adult consumption of cigarettes fall as a result of such a policy change? 3. A friend of your always spends 1/3 of her income on food regardless of her income and regardless of the price of food. (a) What is your friend’s price elasticity of demand for food? (b) What is her income elasticity of demand for food?...
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This note was uploaded on 02/28/2012 for the course ECON 200 taught by Professor Vincent during the Fall '08 term at Maryland.
- Fall '08