A Tax Is Imposed on the Sale of a Product

question 66

Multiple Choice

A tax is imposed on the sale of a product. As long as neither the supply nor the demand is perfectly elastic or inelastic,

• A) the price paid by consumers increases by the full amount of the tax.
• B) the price paid by consumers increases by less than the amount of the tax.
• C) the price paid by consumers increases by more than the amount of the tax.
• D) there is no change in the price paid by consumers.