Demand Elasticity. Please, read the article Hainer, R. (2010), provided in the r

Question

Demand Elasticity. Please, read the article Hainer, R. (2010), provided in the required readings section for this week. The tobacco industry is a prime example to consider when talking about price elasticity of demand. While nicotine use can be addictive for many users, it is not addictive for the so-called "social smokers". What can we say about the price elasticity of demand for nicotine products (such as cigarettes, pipes, tobacco) in the group of nicotine addicted users, versus the group of "social smokers"? Can we say whose demand is likely to be more elastic? Why?

Explanation / Answer

What can we say about the price elasticity of demand for nicotine products (such as cigarettes, pipes, tobacco) in the group of nicotine addicted users, versus the group of "social smokers"?
Price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. (Douglas, E., (2012) sec. 4.2) The price elasticity of demand is the same for addicted users and social smokers. Smoking is an expensive habit. In Mississippi where I live tax on a pack of cigarettes increased to $1.02 in 2009. When the tax on a pack of cigarettes increased my friends who are social smokers didn

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