How will that affect total expenditures on soft drinks

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Reference no: EM131603764

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 manufacturing), how will that affect total expenditures on soft drinks, all other things equal?

Total expenditures will fall.

Total expenditures will rise.

Total expenditures will remain unchanged.

People will buy Pepsi instead of Coke

Reference no: EM131603764

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