Posted by **k** on Wednesday, February 27, 2013 at 10:08pm.

The price elasticity of demand for imported whiskey is estimated to be −0.20 over a wide

interval of prices. The federal government decides to raise the import tariff on foreign

whiskey, causing its price to rise by 20 percent.

a. Will the quantity demanded on imported whiskey rise or fall, and by what percentage

amount?

b. What is the percentage change in the total revenue after the tariffincreases?

- economincs -
**Knights**, Wednesday, February 27, 2013 at 10:11pm
Sales of whiskey will fall by 4%. Finding the solution to this problem is simple algebra. The equation for the price elasticity of demand is Elasticity=%Change Quantity Demanded / %Change Price

Therefore, we just plug in the figures we are given and solve for % Change Quantity Demanded

-.2 = X / .2

Multiple -.2 by .2 and we get -.04 which is 4% which is the % Change in Quantity Demanded

## Answer This Question

## Related Questions

- economics - The price elasticity of demand for imported whiskey is estimated to ...
- economics - The price elasticity of demand for imported whiskey is estimated to ...
- managerial econ - The price elasticity of demand for imported whiskey is ...
- eco - 2. It has been estimated that the price elasticity of demand for ...
- microeconomics - For each of the following scenarios, decide whether you agree ...
- Economics - 1.calculate the price elasticity of demand when the price was ...
- Managerial ECON - Suppose that during a given year: (1) the price of TV sets ...
- managerial economics - 4. The equation for a demand curve has been estimated to ...
- economics - suppose the demand curve for a product is given by Q=10-2P+Ps1,where...
- International Trade-Economics - The demand and supply curves for an import-...

More Related Questions