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How much must cigarette demand raise the price of cigarettes

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Reference no: EM131984623

Problem

Suppose the price elasticity of demand for cigarettes is -0.9 and that the government can essentially set the price of cigarettes by altering the tax rate. If the government wishes to reduce the quantity of cigarettes demanded by 15 percent, how much must it raise the price of cigarettes? The government, to achieve its goal, must raise the price of cigarettes by percent. (Enter your response rounded to two decimal places.)

Reference no: EM131984623

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