Consider a public policy aimed as e-cigarettes. Assume the elasticity of demand is 0.4. If a Juul with two pods cost $40.00 and

Question

Mariulka [41]

2 years ago

13

Consider a public policy aimed as e-cigarettes. Assume the elasticity of demand is 0.4. If a Juul with two pods cost $40.00 and

the government wants to reduce Juuling by 20 percent then by how much should the price have to rise

Business

1 answer:

Iteru [2.4K] · Answer 1 · 2023-06-01T10:07:08+03:00

In order to reduce the Juuling by 20%, price would have to rise by 50%.

<h3>What is price elasticity of demand?</h3>

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

Price elasticity of demand = percentage change in quantity demanded / percentage change in price

Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one.

<h3>What should be the percentage rise in price?</h3>

0.4 = 20%/ price

price = 20% / 0.4

= 50%

To learn more about price elasticity of demand, please check: brainly.com/question/18850846