Homework Help Forum: Microeconomics

Posted by Karen on Wednesday, October 21, 2009 at 4:53pm.

Consider public policy aimed at smoking a.) Studies indicate that the price elasticity of demand for cigarettes currently costs $2 and the government wants to reduce smoking by 20%, by how much should it increase the price? b.) 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? c.) Studies also find that teenagers have a higher price elasticity than do adults. Why might this be true?

• Microeconomics - economyst, Thursday, October 22, 2009 at 9:15am

  a) you did not provide an elasticity b) you did not provide a short run vs long-run elasticity. c) take a shot, what do you think? Hint: are people with lots of money more likely or less likely to be sensitive to changes in cigarette prices.

  
  

Answer this Question

First Name:
School Subject:
Answer: