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The price for cigarettessold by Big Tobacco Co Ltdwas6.00per packet in March 2018. During the monthof March, the consumption of cigarettes was1000 packets.However, the Board
The price for cigarettessold by Big Tobacco Co Ltdwas6.00per packet in March 2018. During the monthof March, the consumption of cigarettes was1000 packets.However, the Board of Directorsof Big Tobacco Co Ltddecided to increasetheprice by 25%during the monthofApril.As a manager you noted that price elasticity of demand was 0.8.As a manager Big Tobacco Co Ltd:
A.Adviseyourmanagement ofthe strategythat could be adoptedby your firmto maintainsales.(5 Marks)
B.Also,advise your government onrecommendedinterventions in the cigarette market.(5Marks)
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