Author Question: In a recent article, two economists estimated that the 37.5 increase in price that would result from ... (Read 83 times)

JMatthes · **on:** Jul 1, 2018

In a recent article, two economists estimated that the 37.5 increase in price that would result from a 75 cent tax increase on cigarettes would lead to a decrease in smoking among college students of 30.

What can you conclude about the demand for cigarettes among college students? A) It is price elastic.
B) It is price inelastic.
C) It is unit elastic.
D) It is perfectly inelastic.

Question 2

Suppose the observed annual quantity of steel exchanged in the European market is 30 million metric tons, and the observed market price is 90 euros per ton.

If the price elasticity of demand for steel is -0.3 in Europe, what is an appropriate value for the price coefficient (b) in a linear demand function Q = a - bP?
A) b = 0.9
B) b = -0.9
C) b = 0.1
D) b = -0.1