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The Motor Transport Authority (MTA) expects that new car sales will decrease from48,500cars in December to46,950cars in January due to 5% Value Added Tax (VAT)

The Motor Transport Authority (MTA) expects that new car sales will decrease from48,500cars in December to46,950cars in January due to 5% Value Added Tax (VAT) in 2018, which will be completely passed on to consumers. Calculate PED, state whether it is elastic or inelastic, and, state what manufacturers and dealers should do to maximize revenue.

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