Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 5, Problem 10PA
Subpart (a):
To determine
Percentage change in price .
Subpart (b):
To determine
Impact of the policy change on the consumption.
Subpart (c):
To determine
Impact of the policy change on the consumption.
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Students have asked these similar questions
Consider public policy aimed at smoking.
a. Studies indicate that the price elasticity of
demand for cigarettes is about 0.4. If a pack
of cigarettes currently costs $2 and the
government wants to reduce smoking by
20 percent, by how much should it increase
the price?
b. If the government permanently increases
the price of cigarettes, will the policy have a
larger effect on smoking one year from now
or five years from now?
c. Studies also find that teenagers have a
higher price elasticity than do adults. Why
might this be true?
Consider public policy aimed at smoking.
a.Studies indicate that the price elasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently costs $2 and the government wants to reduce smoking by 20 percent, how much should it increase the price?
If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking one year from now or five years from now?
Studies also find that teenagers have a higher price elasticity than do adults. Why might this be true?
Is elasticity important in the analysis of the market? Why?
Chapter 5 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
Ch. 5.1 - Define the price elasticity of demand. Explain...Ch. 5.2 - Define the price elasticity of supply. Explain...Ch. 5.3 - Prob. 3QQCh. 5 - A life-saving medicine without any close...Ch. 5 - The price of a good rises from 8 to 12, and the...Ch. 5 - A linear, downward-sloping demand curve is a....Ch. 5 - Prob. 4CQQCh. 5 - An increase in the supply of a good will decrease...Ch. 5 - Over time, technological advance increases...Ch. 5 - Prob. 1QR
Ch. 5 - List and explain the four determinants of the...Ch. 5 - Prob. 3QRCh. 5 - Prob. 4QRCh. 5 - If demand is elastic, how will an increase in...Ch. 5 - What do we call a good with an income elasticity...Ch. 5 - How is the price elasticity of supply calculated?...Ch. 5 - If a fixed quantity of a good is available, and no...Ch. 5 - Prob. 9QRCh. 5 - Prob. 1PACh. 5 - Prob. 2PACh. 5 - Suppose the price elasticity of demand for heating...Ch. 5 - A price change causes the quantity demanded of a...Ch. 5 - Prob. 5PACh. 5 - The price of coffee rose sharply last month, while...Ch. 5 - Suppose that your demand schedule for pizza is as...Ch. 5 - The New York Times reported (Feb. 17, 1996) that...Ch. 5 - Prob. 9PACh. 5 - Prob. 10PACh. 5 - You are the curator of a museum. The museum is...Ch. 5 - Prob. 12PA
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Similar questions
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- . Gas Prices and Public Transit Ridership. Consider the effect of higher gasoline prices on public transit ridership. The initial price of public transit is $2.00 per ride and the initial ridership is 100,000 people per day. Suppose the elasticity of transit ridership with respect to the price of gasoline is +0.667 or (2/3) and the price of gasoline increases by 30 percent? A. Assume the price of public transit remains at $2. Use a graph to show the effect of the increase in the gas price on transit ridership. B. Suppose the transit authority matches the increase in the price of gasoline, increase the transit fare by 30 percent. The price elasticity of demand for transit ridership is 0.333 (or 1/3). Use your graph to show the combined effect of the gas tax and higher transit fare. C. Explain why the net change in transit ridership is positive or negative.arrow_forwardDescribe elasticity effects as it relates to services such as health care,higher education,food/produce and transportation?arrow_forwardPrice elasticity of demand estimates come up often when taxes are being placed on goods. Why do you think knowing the price elasticity of demand is important for policy? Despite large taxes on cigarettes (and the predicted decrease in consumption), the tobacco industry has seen steadily rising profits. What can explain this? What do you think would happen to the price elasticity of demand as e-cigarettes become more popular and available?arrow_forward
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