Economics 0455 · IGCSE · Price elasticity of demand (PED)

Price elasticity of demand (PED) — practice question

The price elasticity of demand for cigarettes is estimated at $0.5$. The government puts in place a tax on cigarettes in order to lower consumption. By what percentage must the price of cigarettes increase to cut consumption by $10\%$?

  • A$5\%$
  • B$10\%$
  • C$15\%$
  • D$20\%$

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