Derive linear demand and supply curves for the cigarette

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In 1998, Americans smoked 470 billion cigarettes. The average retail price was $2 per pack. Statistical studies have shown that the price elasticity of demand is -0.4, and the price elasticity of supply is 05. Using this information, derive linear demand and supply curves for the cigarette market.

(For more information on this market, see Frank J. Chaloupka, "The Economics of Smoking," NBER working paper, 1999, which can be accessed.

Reference no: EM13321458

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