1.Consider public policy aimed at smoking.

a.Studies indicate that the price elasticity of demand for cigarettes is about . If a pack of cigarettes currently costsand the government wants to reduce smoking bypercent, by how much should it increase the price?

b.If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking one year from now or five years from now?

c.Studies also find that teenagers have a higher price elasticity of demand than adults. Why might this be true?