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'Assume That the Supply of Forest Products Is Relatively Inelastic

Question 32

Multiple Choice

'Assume that the supply of forest products is relatively inelastic and the supply of coffee is relatively elastic'.According to this statement, a tax levied on coffee will cause the loss of producer surplus to be:


A) relatively large
B) relatively small
C) zero
D) either small or large, depending on the elasticity of demand

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