Answer to Question #129369 in Microeconomics for arshiam Zafar

Question

Teenagers have a higher price elasticity of demand for smoking than do adults.
Why might the above statement be true?

Answer 1

Cigarettes would have something that's known as an inelastic demand. This means if the price goes up consumers will continue to buy them (and reduce spending in other areas) as they are an addictive substance. So adults generally have more disposable income than teenagers.