Assume the Supply Curve for Product X Is Perfectly Elastic

question 36

Multiple Choice

Assume the supply curve for product X is perfectly elastic and that government imposes a $2-per-unit excise tax. We can conclude that the resulting

• A) increase in output will be greater the less elastic the demand curve.
• B) decrease in output will be greater the less elastic the demand curve.
• C) decrease in output will be greater the more elastic the demand curve.
• D) increase in output will be greater the more elastic the demand curve.