The Emergence of a Black Market ________ the Elasticity of Demand

Multiple Choice

The emergence of a black market ________ the elasticity of demand in the legal market for cigarettes. An increase in the tax rate can result in a decrease in the tax revenue when the elasticity of demand is ________.

A) decreases; elastic
B) decreases; inelastic
C) increases; elastic
D) increases; inelastic
E) increases; unit elastic