The price elasticity of demand for imported mineral water


The price elasticity of demand for imported mineral water is estimated to be ?0.20 over a wide interval of prices. The federal government decides to raise the import tariff on foreign mineral water, causing its price to rise by 20 percent.

a. Will the quantity demanded on imported mineral water rise or fall, and by what percentage amount?

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

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Business Economics: The price elasticity of demand for imported mineral water
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