Assume a price elasticity of demand of 0.50. If the tobacco lobby is successful in reducing a tax on the price of cigarettes by 10 percent, the quantity demanded will:

A. Decrease by 5 percent.
B. Decrease by 2 percent.
C. Increase by 5 percent.
D. Increase by 2 percent.


Ans: C. Increase by 5 percent.

Economics

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A particularly severe recession is called a(n):

A. lull. B. growth recession. C. depression. D. super recession.

Economics

Which of the following indicates that there is a shortage in the market?

A) Demand is rising. B) Demand is falling. C) Price is rising. D) Price is falling.

Economics

Income is considered to be a

A) nontaxable stream of funds. B) flow. C) stock. D) resource.

Economics

Refer to the diagram where D and S are the United States' demand for and supply of Swiss francs. At the equilibrium exchange rate, E, the United States' balance of payments is in equilibrium. Under a system of flexible exchange rates, the shift in demand from D to D' will:



A.  ultimately reduce U.S. exports and raise U.S. imports.
B.  cause the dollar to appreciate.
C.  cause the Swiss franc to depreciate.
D.  cause the dollar to depreciate.

Economics