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Vara D, Salazar M, Olea-Herrero N, Guzman M, Velasco G, Diaz- LI

ISBN 978-0-394-48819-6

The following table summarizes the demand for cigarettes [2 Marks] Price (AED) 25 Quantity Demanded 1,940 1,800 30 a) Calculate the price elasticity of demand using the mid-point method b) If a pack of cigarettes currently costs AED 25 and the government wants to reduce smoking by 20 percent, by how much should it increase the price