The Price Elasticity of Demand for Soft Drinks Has Been

question 96

Multiple Choice

The price elasticity of demand for soft drinks has been estimated to be -0.55.If the government enacts a major increase in the tax on imported sugar (a major ingredient in soft drink manufacture and bottling) , how will that affect total expenditures on soft drinks, all other things unchanged?

• A) total expenditures will remain unchanged
• B) total expenditures will fall
• C) total expenditures will rise
• D) people will buy Pepsi instead of Coke

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