After the implementation of the tax

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When the price of wine is $10 per bottle, Tom purchases 30 bottles every month. Later, the government introduces a 50% tax on all alcoholic beverages, which is to be completely borne by consumers. This reduces Thomas's consumption to 16 bottles of wine a month. (1) What’s Tom’s arc elasticity of demand? (2) After the implementation of the tax, what happens to Tom’s expenditure on wine? (3) Why?

Reference no: EM131092303

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