The price for cigarettes was AUD6 per packet in March 2018. During the month, the consumption of cigarettes was 1000 packets. However, the Board of Directors decided to increase price by 25%. As a manager you noted that price elasticity of demand was 0.8. 

i. Examine the percentage change in cigarettes quantity demand in April 2019 and the quantity that was sold during the month. 

ii. As a manager of a grocery outlet in Sydney advise your Board of Directors the benefits of calculating Elasticity of demand and the strategy that could be adopted in order to increase revenue.

iii. Explain the benefits of your findings to government.

Answer rating: 100% (QA)

i Percentage change ... View the full answer