If addiction makes cigarettes such a necessity, is it correct to ...

[c0205847]

If addiction makes cigarettes such a necessity, is it correct to think that cigarettes are perfectly inelastic in both supply and demand.
 
  What will be an ideal response?

Question 2

Mr. McConaughey has the afternoon, 5 hours, to spend doing whatever he wants. How much time does Mr. McConaughey spend with his friends and family and how much time does he spend breaking a sweat to maximize his total utility?
 
  A) 3 hours with friends and family and 2 hours breaking a sweat
  B) 2 hours with friends and family and 3 hours breaking a sweat
  C) 0 hours with friends and family and 5 hours breaking a sweat
  D) 3 hours with friends and family and 4 hours breaking a sweat

[mmpiza]

Answer to Question 1

Cigarettes might be perfectly inelastic in demand over a small range of prices. However, at high enough prices there is some decrease in the quantity demanded. Some consumers would quit, others would cut down the quantity they smoke each day, and more kids would find it too costly to get started. On the supply side, a higher price will lead to more tobacco being planted, so that as time passes the quantity supplied would increase. So, as time passes the supply of tobacco is not perfectly inelastic.

Answer to Question 2

B