Suppose That There Is a Tax of $5 Per Unit

question 166

Multiple Choice

Suppose that there is a tax of $5 per unit, and the demand curve is more elastic than the supply curve. Which of the following statements could be TRUE?

• A) Buyers pay $3 of the tax.
• B) Buyers pay $1 of the tax.
• C) Sellers pay $1 of the tax.
• D) Sellers pay all of the tax.