If a Good Is Produced by an Increasing-Cost Competitive Industry

question 21

Multiple Choice

If a good is produced by an increasing-cost competitive industry and the demand for its product is elastic,the imposition of a per-unit tax on producers will cause price to _____ in the short run.

• A)rise by the amount of the tax
• B)fall by the amount of the tax
• C)rise by less than the amount of the tax
• D)fall by more than the amount of the tax

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