Problem
Many industrywide studies of the elasticity of demand for cigarettes (an industry dominated by a few firms with tremendous market power) indicate a price elasticity near -?0.5. Yet, our study of market power tells us that a firm with any market power at all should never operate at a point on its demand curve where demand is inelastic. How can you reconcile these apparently contradictory statements?
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.