Illustrate what effect with this have on its optimal price

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Q. The US cigarette industry has negotiated with Congress also government agencies to settle liability claims once morest it. Under the proposed settlement, cigarette companies will create fixed yearly payments to the government based on their historic marketplace shares. Assume a manufacturer estimates its marginal cost at $1.00 per pack, its own price elasticity at -2 also sets its price at $2.00. Which corporation's settlement obligations are expected to raise its standard total cost per pack by about $.60. Illustrate what effect with this have on its optimal price?

Reference no: EM1343983

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