I am cramming for an examine. I can not locate one of my graded lessons with all my notes. I am trying to redo the equaitons. I am really stuck on how to simplify this one.
Problem:
Studies indicate that the price elasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently costs $2 and the govenment wants to reduce smoking by 20 percent, by how much should the government increase the price?
The teacher wrote this out for the answer. I am not clear on how it is simplified to come down to the answer on 3.33
P2-2```2(P2-2)
_____= _______=0.5
(P2+2)``P2+2
2P2-4=0.5P2+1
1.5P2=5
P2=3.33
0 answers