Multiple Choice
Assume that the elasticities of supply and demand in an industry are both equal to 2 and that it is currently untaxed. A new tax imposed on the industry will:
A) be borne more by suppliers than demanders.
B) be borne more by demanders than suppliers.
C) be borne equally by demanders and suppliers.
D) not raise any added revenue for the government since demand is relatively elastic.
Correct Answer:
Verified
Correct Answer:
Verified
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