![Does a 5% VAT tax cause prices to rise by 5%?](https://www.derasat.org.bh/wp-content/uploads/2019/01/A-Bahraini-woman-walks-through-local-souq-as-she-looks-for-clothes-for-her-children-ahead-of-Eid-al-Adha-in-Manama.jpg)
The answer lies in the sensitivity of demand to prices, a concept that economists formally refer to as the “price elasticity of demand”….
The answer lies in the sensitivity of demand to prices, a concept that economists formally refer to as the “price elasticity of demand”….