Please check the last one and see if its right Suppose consumers buy 60 million

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Please check the last one and see if its right

Suppose consumers buy 60 million packs of cigarettes per month at a price of $5 per pack. If a $2 tax is added to that price Instructions: Enter your responses as a percentage rounded to one decimal place a. By what percentage does the price change? percent b. By what percentage will cigarette sales decline in the short run? (See the table below for a clue) Price Elasticity Product Relatively elastic (E 1) Airline travel, long run Restaurant meals Fresh fish New cars, short run 2.4 2.3 2.2 1.2-1.5 Unitary elastic (E1) Private education Radios and televisions Shoes Movies 1.2 0.9 0.9 Relatively inelastic (E 1) Milk Cigarettes Coffee Eggs Gasoline, short run Electricity (in homes) 0.6 0.4 0.3 0.3 0.2 percent c. Refer to the article to answer the final question

Explanation / Answer

a) percentage change in price = (tax/original price)*100 = (2/5)*100 = 40 percent

b) Price elasticity for cigarettes =0.4

Elasticity =(Percentage change in Quantity/ Percentage change in price)

0.4 = x/40

x= 16percent.Sales decline by 16 percent.

c) 7 percent

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