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Assume that the government enacts a per-pound tax on deli roast beef. Before the tax, 900 pounds of deli roast beef are sold at an equilibrium price of $6.50 per pound. After the tax, 775 pounds are sold at $8 per pound. Which of the following are true of the tax?

A. If supply is perfectly inelastic, the full tax incidence is imposed on the suppliers.
B. If supply is perfectly elastic, the full tax incidence is imposed on the suppliers.
C. The tax is $1.50.
D. The tax is less than $1.50.
E. If demand is less elastic than supply, the buyer bears a larger burden of the tax.
F. The tax is more than $1.50.
G. If demand is more elastic than supply, the buyer bears a larger burden of the tax.

Respuesta :

E

ℰ:

for 900 pounds it cost 6.50 but for 775 pounds it cost 8 What does this tells us? if you get higher pounds the lesser the tax , but if you get lesser pounds the higher the tax . Therefore the answer is E , hope this helps!

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