I understand the $1,526.25 calculation. However, I don’t understand how the Sales tax ($138.75) was determined?
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$1,526.25 is the sales INCLUDING the tax collected. If we divide by (1+tax %), then we get back to the pre-tax sales AFTER the drop in demand.
The simpler way to do it is new pre-tax sales = 1,500 * (1 - 0.075) = $1,387.50. The resulting tax is 10% * 1,387.5 = 138.75.
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Beautiful. I was thinking there was an easier way and you showed it!