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    Elasticities: Reducing Teenage Smoking and Jackscrew Assembly

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    1.1Smokers: Old and New

    Explain in terms of elasticities, why placing a tax on cigarettes might reduce teenage smoking while simultaneously raising revenues from older smokers with a more-than-a-pack-a-day habit.

    1.3 "Part Forces Hawaiian to Cancel 18 Flights" )
    The Honolulu Advertiser
    Monday, February 14, 2000
    Karen Blakeman
    Advertiser Sta_ Writer
    Hawaiian Airlines canceled 18 interisland
    flights yesterday after inspections
    revealed a second airplane with
    a worn jackscrew assembly, the part
    suspected in the crash of Alaska Airlines
    Flight 261.
    Two Hawaiian DC-9s were out of
    service yesterday, awaiting parts to
    the horizontal stabilizers jackscrew
    assembly, said Hawaiian Airlines
    spokesman Keoni Wagner.
    Wagner said passengers on the
    canceled flights were rebooked on
    flights with similar departure times.
    Hawaiian was to have flown 150 interisland
    flights yesterday before the
    cancellations.
    The first worn jackscrew was found
    Friday night, when Hawaiian began
    Federal Aviation Administration ordered
    inspections of its fleet of
    15 DC-9s. The FAA last week ordered
    airlines nationwide to inspect
    nearly 1,100 planes that use jackscrew
    assemblies similar to the one suspected
    to have failed in Alaska Airlines
    Flight 261. The crash killed 88
    people.
    Alaska Airlines discovered two
    more of its airplanes showed wear to
    the jackscrew, a 24-inch grooved rod
    that moves the stabilizer-the horizontal
    wing on the aircraft tail-up
    and down. The stabilizer keeps the
    aircraft level during flight.
    Airlines nationwide had reported
    worn jackscrews in more than 22 airplanes
    yesterday. Inspections are to
    be finished today.
    By early yesterday, Hawaiian had
    inspected 13 of its fleet of 15 DC-
    9s. Wagner said jackscrew assembly
    prices had leaped from about $18,000
    to as much as $50,000.

    (a)How would you characterize demand for the jackscrew assembly-elastic or inelastic? Why?
    (b)
    Hint: You don't need to do any calculations for this question. ()
    (c)The article mentions that the price of these jackscrew assemblies had shot up from $18,000
    (d)
    to $50,000 in just a few days. Explain this price increase by discussing which curve shifts and
    which way it moves. ()

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    Explain in terms of elasticities, why placing a tax on cigarettes might reduce teenage smoking while simultaneously raising revenues from older smokers with a ...

    Solution Summary

    The solution assists with answering two elasticity questions regarding reducing teenage smoking and a jackscrew assembly

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