Consider the public policy initiatives aimed at curbing smoking in Australia. a) Studies indicate that the price elasticity of demand for cigarettes is about -0.20. If a packet of cigarettes currently costs $25 and the Australian Government wants to reduce smoking by 15%, by how much should it increase the price? b) If the Australian Government permanently increases the price of cigarettes, will the policy have a larger effect on smoking 1 year from now or 5 years from now? c) Studies also find that teenagers have a higher price elasticity than do adults. Why might this be the case?

Consider the public policy initiatives aimed at curbing smoking in Australia. a) Studies indicate that the price elasticity of demand for cigarettes is about -0.20. If a packet of cigarettes currently costs $25 and the Australian Government wants to reduce smoking by 15%, by how much should it increase the price? b) If the Australian Government permanently increases the price of cigarettes, will the policy have a larger effect on smoking 1 year from now or 5 years from now? c) Studies also find that teenagers have a higher price elasticity than do adults. Why might this be the case?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 10PA

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Consider public policy aimed at smoking.a. Studies indicate that the price elasticity of demandfor cigarettes is about 0.4. If a pack of cigarettescurrently costs $5 and the government wantsto reduce smoking by 20 percent, by how muchshould it increase the price?b. If the government permanently increases theprice of cigarettes, will the policy have a largereffect on smoking one year from now or five yearsfrom now?c. Studies also find that teenagers have a higherprice elasticity of demand than adults. Why mightthis be true?
Consider public policy aimed at smoking. a. Studies indicate that the price elasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently costs $2 and the government wants to reduce smoking by 20 percent, by how much should it increase the price? b. If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking one year from now or five years from now? c. Studies also find that teenagers have a higher price elasticity than do adults. Why might this be true?
10. Problems and Applications Q10 Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.2. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 10%, it should increase the price by If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be from now. % than the effect 3 months Studies also find that teenagers have a higher price elasticity of demand than do adults. Which of the following statements are consistent with this result? Check all that apply. Adults are more likely to be addicted to cigarettes. It is legal for adults to consume alcohol, so many choose to spend their money on that good rather than cigarettes. Teenagers do not have as much income as adults, so they are more price sensitive.
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11. Consider public policy aimed at smoking. a. Studies indicate that the price elasticity ofdemand for cigarettes is about 0.4. If a packof cigarettes currently costs $2 and thegovernment wants to reduce smoking by20 percent, by how much should it increasethe price? b. If the government permanently increasesthe price of cigarettes, will the policy have alarger effect on smoking one year from nowor five years from now? c. Studies also find that teenagers have ahigher price elasticity than do adults. Whymight this be true?
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10. Problems and Applications Q10 Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.2. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 10%, it should increase the price by If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be from now. Studies also find that teenagers have a higher price elasticity of demand than do adults. Which of the following statements are consistent with this result? Check all that apply. 00 Adults are more likely to be addicted to cigarettes. smaller Teenagers do not have as much income as adults, so they are more price sensitive. larger It is legal for adults to consume alcohol, so many choose to spend their money on that good rather than cigarettes. % than the effect 5 years