Answer to Question #260474 in Marketing for Junaid

Question

A wheat manufacturer has a contribution margin of 85%. Recently, to deter over farming, the government has decided to put a 27% tax on the sale of wheat products. But people love their carbs, and therefore the price elasticity of demand for wheat is low at .40. What is the expected percentage change in sales from this new tax?

The answer is Sales decrease by 22.95%

Can you show me how to get that answer!

Answer 1

*Answer is 22.95%