Scenario 5.1 The Demand for Noodles Is Given by the Following Equation

Multiple Choice

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
-If the demand for liquor is elastic and the supply of liquor is inelastic, when the government increases liquor tax, _____.

A) most of the tax will be paid by the consumer
B) most of the tax will be paid by the producer
C) all of the tax will be paid by the consumer
D) all of the tax will be paid by the producer
E) the tax will be paid by the retailer