The government decide to impose a tax what will happen?
the long-run own price elasticity for Marlboro cigarettes (in absolute
terms) is 3.0 but that the own price elasticity of all tobacco products is (in absolute
terms) 0.5. Is the difference surprising? If the government decided to impose a tax
only on Marlboro cigarettes which led to a 10% rise in its price, what would happen
to (a) the quantity demanded of Marlboro cigarettes and (b) consumers' total
expenditure on Marlboro cigarettes? What would happen if the government imposed
an across the board tax on all tobacco products rasing their price by 10%?
Best Answer - Chosen by Voters
We will buy Marlboro cigarettes online. I am not a heavy smoker, but, to be frank with you, I was a bit fed up of spending a fortune on cigarettes per year. I leave in Massachusetts. Here cigarettes are very expensive, But I couldn't care less anymore, as I started to buy them online http://www.tobaccopub.com. It's great savings.
We know that consumers will react to price changes, but how MUCH will they react? Knowing this is important to business owners and policymakers ...
