If government imposes tax on cigarettes which raises price

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The price elasticity of demand for cigarettes is 0.4. If government wants to reduce smoking in the population by 15 percent, by what percentage should it raise the price of cigarettes? Teenagers have a higher price elasticity of demand for cigarettes than people aged 20 and above. Suppose the price elasticity of teenager's demand for cigarettes is 0.8. If the government imposes a tax on cigarettes that raises the price to reduce overall smoking by 15 percent, by what percentage will the government reduce teenage smoking?

Reference no: EM13455532

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