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Demand and Forecasting - Tobacco Company

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If you were a manager in a tobacco company, analyze the elasticity of demand for tobacco products. Evaluate the factors involved in making decisions about pricing tobacco products indicating which would be the most influential.

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Price elasticity of demand is discussed step-by-step in this solution. The response also has the sources used.

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If you were a manager in a tobacco company, you should consider the price elasticity of demand for tobacco products for pricing them. The price elasticity of demand is the responsiveness of the quantity demanded of a good to a change in its price. It gives a percent change in quantity demanded in response to one percent change in price. (All other factors held constant). Price elasticity of demand is negative. The price elasticity is said to be elastic when it is less than minus one and is said to be inelastic when it lies between ...

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