The Honolulu tourism commission proposed a 6 percent tax on hotel rooms to pay for an outdoor amphitheater. A Purdue University economist estimates that the tax would result in a 6 percent increase in the price of hotel rooms. If the elasticity of demand is 1.33, what is the expected change in quantity demanded?
A. 12.5 percent
B. ?8 percent
C. 8 percent
D. ?12.5 percent
Answer: B
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