There Have Been Proposals That a Tax Be Imposed on Sugar-Laden

Multiple Choice

There have been proposals that a tax be imposed on sugar-laden soft drinks in an attempt to reduce their consumption.Assume for simplicity that all bottled soft drinks are the same size.Suppose the initial market equilibrium is P = $2.00 and Q = 1000. FIGURE 4-4
-Refer to Figure 4-4.Suppose the government imposes a tax of $0.60 per soft drink purchased.Which of the following statements most accurately describes the economic incidence of this tax?

A) The consumer bears more of the burden because demand is elastic relative to supply.
B) The seller bears more of the burden because supply is inelastic relative to demand.
C) The consumer bears more of the burden because demand is inelastic relative to supply.
D) The seller bears more of the burden because supply is elastic relative to demand.
E) The burden is shared equally between consumer and seller because the slopes of the supply and demand curves are the same.