4. A senator in a certain state proposes to reduce the state's cigarette-tax. His reasoning is thatthis would reduce cigarette prices, which in turn would make people buy more cigarettes.Therefore, he concludes, the total cigarette-tax revenues collected by the state would increase.Demand for cigarettes have been found by many studies to be price-inelastic.a) Give one possible reason why demand for cigarettes is inelastic.b) Do you agree with the senator's logic? Explain your answer briefly but clearly, using economicterms and models that we have discussed in Econ 202.

Elasticity of demand explains how the change in price will effect the demand of that good or…

A senator in a certain state proposes to reduce the state's cigarette-tax. His reasoning is that is would reduce cigarette prices, which in turn would make people buy more cigarettes. herefore, he concludes, the total cigarette-tax revenues collected by the state would increase. emand for cigarettes have been found by many studies to be price-inelastic. Give one possible reason why demand for cigarettes is inelastic. Do you agree with the senator's logic? Explain your answer briefly but clearly, using economic erms and models that we have discussed in Econ 202.

A senator in a certain state proposes to reduce the state's cigarette-tax. His reasoning is that is would reduce cigarette prices, which in turn would make people buy more cigarettes. herefore, he concludes, the total cigarette-tax revenues collected by the state would increase. emand for cigarettes have been found by many studies to be price-inelastic. Give one possible reason why demand for cigarettes is inelastic. Do you agree with the senator's logic? Explain your answer briefly but clearly, using economic erms and models that we have discussed in Econ 202.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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