The United States Tobacco Settlement between the major tobacco companies and 46 states caused the price of cigarettes to jump 21% (45¢ per pack). Levy and Meara (2006) found only a 2.65% drop in prenatal smoking 15 months later. What is the elasticity of demand for this group? The elasticity of demand is nothing. (Enter a numeric response using a real number rounded to three decimal places.)

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Business

Ronnie Stokes

31 July, 10:04

The United States Tobacco Settlement between the major tobacco companies and 46 states caused the price of cigarettes to jump 21% (45¢ per pack). Levy and Meara (2006) found only a 2.65% drop in prenatal smoking 15 months later. What is the elasticity of demand for this group? The elasticity of demand is nothing. (Enter a numeric response using a real number rounded to three decimal places.)

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Alfonso Beltran · Answer 1

B. The elasticity of demand is - 0.126

Explanation:

% Change in Quality demand = - 2.65% (this is negative because of drop in prenatal smoking)

% Change in price = 21%

Elasticity of demand is given by the formula below:

Elasticity of demand = % change in quantity demanded : %change in price

Elasticity of demand = - 2.65 / 21

Elasticity of demand = - 0.126