Suppose the Elasticity of Demand for a Product Is 0

question 11

Multiple Choice

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1. If the government imposes a tax on the product, then

• A) buyers and sellers pay exactly the same share of the tax.
• B) buyers pay a smaller share of the tax than sellers, but both buyers and sellers pay some of the tax.
• C) sellers pay all of the tax.
• D) buyers pay all of the tax.
• E) because the elasticity of demand is zero, the government collects no revenue from this tax.

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