Suppose There Is an Increase in the Excise Tax Imposed

Multiple Choice

Suppose there is an increase in the excise tax imposed on cigarettes, a good for which the demand is relatively inelastic. The short-run burden of the tax increase will be borne primarily by

A) consumers, because the increase in market price will be large relative to the increase in the excise tax.
B) firms, because the increase in market price will be large relative to the increase in the excise tax.
C) consumers, because the increase in market price will be small relative to the increase in the excise tax.
D) firms, because the increase in market price will be small relative to the increase in the excise tax.