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Studies Indicate That the Price Elasticity of Demand for Cigarettes

Question 170

Multiple Choice

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by


A) 30 percent.
B) 40 percent.
C) 80 percent.
D) 250 percent.

Correct Answer:

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