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If an Increase in the Excise Tax Imposed on Cigarettes

Question 133

Multiple Choice

If an increase in the excise tax imposed on cigarettes pushes the price per pack up by 20 percent, and the quantity sold declines by 8 percent as a result, the price elasticity of demand for cigarettes is equal to


A) −0.2.
B) −0.4.
C) −0.8.
D) −5.

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