Suppose cigarettes could be purchased for less in neighboring states because cigarette taxes are lower in those states. Would effect the price elasticity of demand for cigarettes in New York more if the difference in taxes was greater. This would make the price elasticity of demand in New York higher. This would make the price elasticity of demand in New York lower. O Would effect the price elasticity of demand for cigarettes in New York less if the difference in taxes was greater.
Suppose cigarettes could be purchased for less in neighboring states because cigarette taxes are lower in those states. Would effect the price elasticity of demand for cigarettes in New York more if the difference in taxes was greater. This would make the price elasticity of demand in New York higher. This would make the price elasticity of demand in New York lower. O Would effect the price elasticity of demand for cigarettes in New York less if the difference in taxes was greater.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose cigarettes could be purchased for less in neighboring states because cigarette taxes are lower in those states.
Group of answer choices
Would effect the price elasticity of demand for cigarettes in New York more if the difference in taxes was greater.
This would make the price elasticity of demand in New York higher.
This would make the price elasticity of demand in New York lower.
Would effect the price elasticity of demand for cigarettes in New York less if the difference in taxes was greater.
Transcribed Image Text:**Understanding Price Elasticity of Demand for Cigarettes**
*Scenario Analysis: Cross-State Price Variations*
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**Scenario:**
Suppose cigarettes could be purchased for less in neighboring states because cigarette taxes are lower in those states.
**Questions:**
- Would the price elasticity of demand for cigarettes in New York change more if the difference in taxes was greater?
- **( )** Would affect the price elasticity of demand for cigarettes in New York more if the difference in taxes was greater.
- Would this situation make the price elasticity of demand in New York higher?
- **( )** This would make the price elasticity of demand in New York higher.
- Would this situation make the price elasticity of demand in New York lower?
- **( )** This would make the price elasticity of demand in New York lower.
- Would the price elasticity of demand for cigarettes in New York change less if the difference in taxes was greater?
- **( )** Would affect the price elasticity of demand for cigarettes in New York less if the difference in taxes was greater.
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**Explanation:**
When analyzing the price elasticity of demand, especially in context with tax variations across different states, it's important to understand that the elasticity measures how demand will change in response to price changes. Greater differences in taxes between regions could potentially influence the purchasing behavior of consumers significantly, leading to either higher or lower elasticity depending on the context and consumer responses.
**Key Concepts:**
- **Price Elasticity of Demand:** A measure of how much the quantity demanded of a good responds to a change in the price of that good.
- **Higher Elasticity:** Indicates consumers are more responsive to price changes.
- **Lower Elasticity:** Indicates consumers are less responsive to price changes.
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