A study found that, among addicted smokers, a 10 percent increase in the price of cigarettes resulted in a 2 percent decrease in quantity demanded. For these consumers, cigarettes have a(n)________ price elasticity demand.
A)elastic
B)inelastic
C)cross-price
D)income effect
E)substitution effect

Question

Quizplus · Accepted Answer

A price elasticity of demand coefficient of less than 1 indicates that the good has an inelastic demand. In this case, the 10 percent increase in price resulted in a smaller, 2 percent decrease in quantity demanded, indicating that addicted smokers have an inelastic demand for cigarettes.

A Study Found That, Among Addicted Smokers, a 10 Percent