If the Government Increased Taxes on Soft Drinks, the Result

Multiple Choice

If the government increased taxes on soft drinks, the result would be:

A) an increase in equilibrium price and an increase in equilibrium quantity assuming demand is relatively inelastic.
B) an increase in equilibrium price and a decrease in equilibrium quantity assuming demand is relatively inelastic.
C) an increase in equilibrium price and an increase in equilibrium quantity assuming demand is perfectly inelastic.
D) an increase in equilibrium price and a decrease in equilibrium quantity assuming demand is perfectly inelastic.
E) no change in equilibrium price and a decrease in equilibrium quantity assuming demand is relatively inelastic.