Multiple Choice
If the elasticity of supply is 1, and the elasticity of demand is 3 (in absolute value) , then for a tax of $1 buyers will pay:
A) an extra 25 cents and sellers will receive 75 cents less.
B) an extra 75 cents and sellers will receive 25 cents less.
C) an extra 50 cents and sellers will receive 50 cents less.
D) nothing extra since this is the special case where demand is unit elastic.
Correct Answer:
Verified
Correct Answer:
Verified
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