It Has Been Estimated That the Price Elasticity for Cigarettes

Multiple Choice

It has been estimated that the price elasticity for cigarettes is 0.164. Assuming there are currently no taxes on cigarettes, to reduce cigarette purchases by 5 percent, the government would need to tax cigarettes enough to:

A) raise the price by 0.82 percent.
B) lower the price by 0.82 percent.
C) raise the price by 30.5 percent.
D) lower the price by 30.5 percent.