How will the increase in paint price affect the demand

Reference no: EM133426250

Question: An investigation has recommended sweeping reforms in the construction industry and estimate it will cost $8 billion. The government wants to impose a 25%tax on paint to recover the cost. The population purchases 1.35 billion litres of paint a year. The price is $1.75/L. With 25% tax on paint, the price will be $2.19L. Price elasticity of demand for paint is -1.89.

How will the increase in paint price affect the demand for paint?

Reference no: EM133426250

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How will the increase in paint price affect the demand : Price elasticity of demand for paint is -1.89. How will the increase in paint price affect the demand for paint

How will the increase in paint price affect the demand : How will the increase in paint price affect the demand for paint - With 25% tax on paint, the price will be $2.19L. Price elasticity of demand for paint

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