Question

In: Economics

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.

Solutions

Expert Solution

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

1. Studies indicate that the price elasticity of demand for cigarettes is around 0.4. If a...
1. Studies indicate that the price elasticity of demand for cigarettes is around 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? 2. If the government permanently increases the price of cigarettes will the policy have a larger effect on smoking 1 ear from now or 5 years from now? 3. Studies also find that teenagers have a higher price elasticity of...
Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.5.
  10. Problems and Applications Q10 Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.5. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 30%, it should increase the price by _______ . If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be _______  than the effect 3 months from now.   Studies also...
Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes...
Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.2. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 10%, it should increase the price by___% . If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be ___than the effect 3 months from now. Studies also find that teenagers have a higher price elasticity of...
Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes...
Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.5. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 30%, it should increase the price by . If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be   than the effect 5 years from now. Studies also find that teenagers have a higher price elasticity of...
Consider a public policy aimed at reducing smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.8.
Consider a public policy aimed at reducing smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.8. a. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 20%, how much should it increase the price of a pack of cigarettes by? b. If the price increase is permanent, will the effect on smoking be greater in 3 months or 3 years? Why?
There are two estimates for the price elasticity of demand for cigarettes, one is -0.4 and...
There are two estimates for the price elasticity of demand for cigarettes, one is -0.4 and the other is -0.8. Assume that the government decides to increase cigarette taxes, which leads to a 20% increase in cigarette prices. You are hired as a consultant to use your economics expertise to predict the impact of this tax change. Use the given information to answer the following questions. a. One of the elasticity figures refers to short-run and the other to long-run....
There are two estimates for the price elasticity of demand for cigarettes, one is -0.4 and...
There are two estimates for the price elasticity of demand for cigarettes, one is -0.4 and the other is -0.8. Assume that the government decides to increase cigarette taxes which leads to a 25% increase in cigarette prices. You are hired as a consultant to use your economics expertise to predict the impact of this tax change. Use the given information to answer the following questions. a. One of the elasticity figures refers to short-run and the other to long-run....
If studies suggest that the price elasticity of demand for cigarettes is 0.2 (in absolute terms),...
If studies suggest that the price elasticity of demand for cigarettes is 0.2 (in absolute terms), and the government wishes to decrease cigarette consumption by 25%, how much of a price increase by taxation would be required to bring this about? Is this policy to reduce smoking likely to have: (a) a larger effect in the longer term than in the shorter term? (b) a larger effect on younger smokers than older smokers?
Consider public policy aimed at smoking a.Studies indicate that the price elasticity of demand for cigarettes...
Consider public policy aimed at smoking a.Studies indicate that the price elasticity of demand for cigarettes is about 0.4.If a packet of cigarettes is currently priced at £6 and the government want 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 one year from now or five years from now? c.Studies also find that teenagers have a higher...
Consider public policy aimed at smoking. a. Studies indicate that the price elasticity of demand for...
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? 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? Studies also find that teenagers have a...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT