Studies indicate that the price elasticity of demand for cigarettes in about 0.4. If a pack of cirarettes currently costs $2 and the government wants to reduce smoking by 20 percent, by how much should the govenment increase the price?
Answer in suppose to be $3.33. When I try to calculate using formulate I can not get the answer.
I got some of the calulation:
Percentage change in P=
.20 Quantity/.4 Price Elasticity of Demand = 0.5
_______ = 0.5
I have tried the calculation several ways and I can not arrive at the answer of $3.33.
Recently Asked Questions
- • Propose the applications of contemporary IT to improve the market situation of Air Macau, and simply justify your idea in the framework of Five
- Describe the four components of an information system. Why is it important to consider each of them when designing and installing an information system?
- I am totally confused why the time becomes 1/3. I found that the direction vector is (5,12) and after I got lost.