If the Demand for a Good Is Highly Inelastic, a Tax

Multiple Choice

If the demand for a good is highly inelastic, a tax on the good

A) places the burden of the tax equally on buyers and sellers
B) permits sellers to pass most of the cost increase resulting from the tax on to the consumers of the product
C) reduces the profits earned by sellers since they must write the check to pay the tax
D) makes the demand more inelastic
E) makes the demand more elastic