Estimating the Elasticity of Demand for Cigarettes

It took a gigantic price increase in Australia to crimp demand for cigarettes.

A correspondent writes in,

Starting out, I paid 16 cents a pack, in 1955. I can understand why it took a gigantic price increase to crimp demand. It's a tough addiction to break. It took me 8 years to quit.

If you think it will take a gigantic price increase to crimp demand, you should probably buy cigarette stocks.

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