Explain the difference in the size of the elasticities

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According to studies by economists Frank Chaloupka and Michael Grossman, the price elasticity of demand for cigarettes for teenagers is 1.3 and for adults is 0.4 ("Price, Tobacco Control Policies and Smoking Among Young Adults," JHE, Vol. 16, no. 3 (June 1997): 359-373) . Which of the following explanations can help explain the difference in the size of the elasticities?

A. None of these explanations is satisfactory.

B. Teenagers are more likely than adults to be addicted to smoking; hence, teens have fewer alternatives to smoking.

C. Spending on cigarettes represents a larger portion of the budget of teenagers than of adults.

D. The adult elasticity is likely to be a long-run estimate, whereas the teenage elasticity is likely to be a short-run estimate of the elasticity of demand.

Reference no: EM131169347

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