Calculate the price elasticity of demand for cigarettes

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A study conducted by the Australian Medical Association suggests that every 10 % increase in the price of cigarettes is associated with a 5 % decrease in the quantity of cigarettes demanded.

a) Use a figures and solution from this study to calculate the price elasticity of demand for cigarettes.

b) Based on your findings, does this suggest that increasing the price of cigarettes will substantially decrease smoking.

Reference no: EM133083190

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