Suppose That There Is a Tax of $1 Per Unit

question 183

Multiple Choice

Suppose that there is a tax of $1 per unit, and the elasticity of supply is 3 and the elasticity of demand is 2 (in absolute value) . How much of the $1 tax is paid by sellers?

• A) $0.60
• B) $0.40
• C) $0.75
• D) $0.67

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