5.1 World famous Pirates’ Candies are manufactured in the Pirate Town of Croatia. Currently, the Pirate Town levies a €1 per-bag tax on all Pirates’ Candies, and the candy shop sells 15,000 bags of candies a year at a total price of €15 per bag. The governor of Pirate Town decided to build a 1:100 wooden model of the town and display it in the town square, at a cost of €15,000. The governor also wants to raise the money from additional tax revenue from sales of Pirates’ Candies. He has asked each of the three town council members to come up with a plan to raise the additional €15,000, and their plans are as follows:

Council member Thompson advises increasing the per-bag tax by €1, Council member Winehouse advises raising the tax by €1.50 per bag, and Council member Sandler advises reducing the current tax by €0.25 per bag.

For each of the three council members’ plans, determine the following:

a. How many total bags of candies would need to be manufactured to increase tax revenue by exactly €15,000?

b. What is the price elasticity of demand for Pirates’ Candies if the tax revenue increases by exactly €15,000?

c. How much total revenue will Pirates’ Candies receive if the tax revenue increases by exactly €15,000?