4. Elasticity
Elasticity and the Midpoint Method
Multiple Choice
Multiple ChoiceAssume that the price elasticity of demand for cigarettes is 0.4. If a pack of cigarettes currently costs $6 and the government aims to decrease smoking by 20 percent, by how much should it increase the price?
A
$1.20
B
$2.40
C
$3.00
D
$4.80
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