The Government Levies an Excise Tax of 5 Cents Per

Multiple Choice

The government levies an excise tax of 5 cents per unit sold on the sellers in a competitive industry.Both supply and demand curves have some elasticity with respect to price.This tax means that the:

A) supply curve shifts up by 5 cents, but (unless demand is perfectly elastic) price will not rise.
B) supply curve shifts up by less than 5 cents, but (unless demand is highly elastic) price will rise by the full 5 cents.
C) supply curve shifts up by less than 5 cents, but (unless demand is highly inelastic) price will rise by more than 5 cents.
D) supply curve shifts up by 5 cents, but (unless supply is perfectly elastic) any price rise will be less than 5 cents.
E) demand curve shift up by 5 cents and price will rise by 5 cents.