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3. (4 marks) Suppose an economist estimates the price elasticity of demand for instant noodle is -2.4, while its price elasticity of supply is 4.0.

3. (4 marks)

Suppose an economist estimates the price elasticity of demand for instant noodle is -2.4, while its price elasticity of supply is 4.0.

If the government decides to impost a per-unit sales tax of $16 per pack of instant noodle, how would the market price for instant noodle be affected?

Show your calculation.

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