Suppose the Demand Curve for Aluminum Cans Is Downward Sloping

question 235

Multiple Choice

Suppose the demand curve for aluminum cans is downward sloping, and the cans are produced in a constant cost industry where the firms are price takers. A $.25-per-can tax is levied on aluminum cans. How much will the price of aluminum cans increase in the short run and the long run?

• A) short run, $.25; long run, more than $.25
• B) short run, less than $.25; long run, $.25
• C) short run, less than $.25; long run, more than $.25
• D) short run, $.25; long run, less than $.25

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