What is the significance of the sign of the income elasticity? (b) The government is very serious about drugs. Despite several penalties, a black market exists. A consultant working with health ministry suggested that the government should increase the price of a pack of cigarettes from Rs. 200 to Rs. 600 and over the year, the quantity demanded of marijuana decreased from 2,000 kgs per day to just 800 kgs. Calculate the cross elasticity of demand and tell why has the policy proved so effective. (05) Please upload this questions answer
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What is the significance of the sign of the income elasticity?
(b) The government is very serious about drugs. Despite several penalties, a black
market exists. A consultant working with health ministry suggested that the
government should increase the price of a pack of cigarettes from Rs. 200 to Rs.
600 and over the year, the quantity demanded of marijuana decreased from
2,000 kgs per day to just 800 kgs. Calculate the cross elasticity of demand and tell
why has the policy proved so effective.
(05)
Please upload this questions answer