If the Elasticity of Supply Is 1, and the Elasticity

question 203

Multiple Choice

If the elasticity of supply is 1, and the elasticity of demand is 3 (in absolute value) , then for a tax of $1 buyers will pay:

• A) an extra 25 cents and sellers will receive 75 cents less.
• B) an extra 75 cents and sellers will receive 25 cents less.
• C) an extra 50 cents and sellers will receive 50 cents less.
• D) nothing extra since this is the special case where demand is unit elastic.

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