Question

10. Problems and Applications Q10 Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.2. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 10%, it should increase the price by % . If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be than the effect 5 years from now. Studies also find that teenagers have a higher price elasticity of demand than do adults. Which of the following statements are consistent with this result? Check all that apply. It is legal for adults to consume alcohol, so many choose to spend their money on that good rather than cigarettes. Teenagers do not have as much income as adults, so they are more price sensitive. Adults are more likely to be addicted to cigaret

Answer 1

From the statements given the ones that are consistent with this result are:

1-Teenagers do not have as much income as adults, so they are more price sensitive.

The study talks about increasing the price to reduce consumption and clarifies that adolescents are more likely to adapt to changes in price. Which is different from that established in the declaration. But the other two options on adults are even less consistent with the statement about the study.