Microeconomics 18th Edition by Campbell McConnell, Stanley Brue, Sean Flynn

Exercise 10

PRICE, CROSS, AND INCOME ELASTICITIES-HOW DO THEY RELATE TO ALCOHOL AND CIGARETTES Go to the National Bureau of Economic Research (NBER) Web site, www.nber.org, and select New Working Papers. In the Google search space, type "alcohol." Use the titles and summaries of the papers to answer the following questions relating to elasticity: ( a ) Do the mentally ill have perfectly inelastic demands for cigarettes and alcohol ( b ) Does alcohol consumption increase in bad times ( c ) What is the effect of cigarette taxes (and smuggling) on the consumption of alcohol Wha does that imply about the cross elasticity of demand between the two ( d ) Is binge drinking among college students sensitive to the price of alcohol