Studies indicate that the price elasticity of demand for cigarettes is about 0.4 . A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6 . According to the midpoint method, the government policy should have reduced smoking by
a. 30%.
b. 40%.
c. 80%.
d. 250%.
b
You might also like to view...
The short-run tradeoff between the unemployment rate and the inflation rate shown by the Phillips curve is represented in the AS-AD model by
A) rightward shifts of the aggregate supply curve. B) the downward-sloping aggregate demand curve. C) the upward-sloping aggregate supply curve. D) the vertical potential GDP line. E) leftward shifts of the aggregate supply curve.
The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre
If the market wage is $300 per day, the firm will NOT hire a fourth worker because the fourth worker would create A) an economic loss and the firm would shut down. B) additional revenue that exceeds the worker's wage. C) additional revenue that exceeds the worker's value of marginal product. D) additional revenue that falls short of the worker's wage.
Molly received an autographed poster of David Hasselhoff for her 21st birthday
Her friend Helga offered her $50 for the poster, but Molly refused to sell the poster even though she knows she would never pay that much to replace it if it was ever damaged or destroyed. Explain this inconsistency in Molly's behavior.
A learning curve may be expressed as a relationship between the labor per unit (L) and the cumulative number of units produced (N)
Which of the following learning curves exhibits a faster reduction in cost of production due to learning, (1 ) L = 10 + N-1 or (2 ) L = 10 + N-0.5? A) Learning curve (1 ) B) Learning curve (2 ) C) Curves (1 ) and (2 ) exhibit the same rate. D) We cannot determine the rate of cost reduction without knowing the value of N.