Assessment Question Week4:

 Price Elasticity of demand and supply

Question 3

The price for cigarettes sold by Big Tobacco Co Ltd was 6.00 per packet in March 2018. During the month of March, the consumption of cigarettes was 1000 packets. However, the Board of Directors of Big Tobacco Co Ltd decided to increase the price by 25% during the month of April.  As a manager you noted that price elasticity of demand was 0.8. As a manager Big Tobacco Co Ltd:

A. As a manager Big Tobacco Co Ltd store advise your management of the strategy that could be adopted by your firm to maintain sales.

B. Also, advise your government on recommended interventions in the cigarette.