Suppose That the Demand for Picture Frames Is Highly Inelastic

question 54

Multiple Choice

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

• A)less than $0.50.
• B)$0.50.
• C)between $0.50 and $1.
• D)$1.