Studies indicate that the price elasticity of demand for cigarettes is about 0.4. Government can increase...

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. Government can increase the price of a pack of cigarettes by increasing the cigarette tax. If a pack of cigarettes currently costs $5, and government wants to reduce smoking by 20%, how much should the price increase? Please explain.

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Rahul Sunny answered 1 year ago

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