ECON! 2003 CE MC.

b. local consumers' expenditure depends on the elasticity of demand. even though the price of the imported garments may be lowered, the % of change in Qd may be smaller than % change in price if the demand for the imported garments is inelastic. local consumers' expenditure on imported would increase or decrease, depending on the elasticity of demand.

for d, as revenue = P x Q, if the price of the good decrease but the % change in Qd is larger than the % change in price, then the tariff revenue of the country coming from imported garments would increase of decrease.

after all, its all about elasticity of demand

um....the answer is C due to b and d are not really true since it depends on the situation.
Answer C: we can apply subsitutes on this question. since the imported garments per unit tariff is reduced, peopl would rather spend more on the imported garments. Alternatively, the sales revenue of domestic farments producers would earn less than before. It cuase the revenue decrease.
You should draw 2 diagram to explain it since it is a subsitute.

Also, if you done 5 more years of passpaper, you would know they have almost same question. just follow it.

B is not nessarily true... so it would not be taken as the answer:
local consumers' expenditure = unit price * quantity demanded
unit price would increase due to the per-unit tariff but the quantity demanded would drease due to the increase in price. So, local consumers' expenditure may increase or decrease.

D is not nessarily true too...
the tariff revenue of the country coming from imported garments =
per-unit tariff * quantity demanded
per-unit tariff increases but the quantity demanded would drease due to the increase in price. So, local consumers' expenditure may increase or decrease.

但問題係我唔覺得c係對...
domestic garments 同 imported garments 係 competitive goods. Decrease in quantity demanded would lead to an increase in demand of the domestic garments, 照計 the sales revenue of domestic garments producers 應該 increase due to the increase in demand 才對!!!

2007-02-06 22:49:22 補充：
對不起... 打得太快.... ==> 但問題係我唔覺得c係不對...

2007-02-06 23:09:08 補充：
但問題係我唔覺得c都係不對...domestic garments 同 imported garments 係 competitive goods. Decrease in quantity demanded in imported garments would lead to an increase in demand in the domestic garments, 照計 the sales revenue of domestic garments producers 應該 increase due to the increase in demand 才對!!!