Import duties will increase total expenditure on imports if the demand for imports is?
Answer Details
If the demand for imports is elastic, then an increase in import duties will lead to a significant decrease in the quantity of imports demanded. This decrease in demand will result in a decrease in total expenditure on imports.
On the other hand, if the demand for imports is inelastic, then an increase in import duties will have little effect on the quantity of imports demanded. As a result, the total expenditure on imports will increase despite the increase in import duties.
Therefore, if the demand for imports is elastic, an increase in import duties will lead to a decrease in total expenditure on imports. But if the demand for imports is inelastic, an increase in import duties will lead to an increase in total expenditure on imports.