Multiple Choice
If the elasticity of demand for cigarettes is 0.75 and the elasticity of supply for cigarettes is 1.25, then a 5 percent decrease in the demand for cigarettes would cause the price of cigarettes to:
A) increase by 2.5 percent.
B) increase by 5 percent.
C) decrease by 2.5 percent.
D) decrease by 5 percent.
Correct Answer:
Verified
Correct Answer:
Verified
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