Assignment
According to a study of U.S. cigarette sales between 1955 and 1985, when the price of cigarettes was 1% higher, consumption would be 0.4% lower in the short run and 0.75% lower in the long run.
a. Calculate the short and long run price elasticity s of the demand for cigarettes
b. Is demand more or less elastic in the long run than in the short run? Explain your answer
c. If the govt. were to impose a tax that raised the price of cigarettes by 5 percent, would total consumer expenditure on cigarettes rise or fall in the short run? What about in the long run?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.