Question

7. If a tax of $2.00 per unit is imposed on the sellers in a perfectly competitive market:

a. price paid by consumers will increase by $2.00 if supply is perfectly inelastic

b. price paid by consumers will increase by more than $2.00 if demand is perfectly elastic

c. The tax burden will fall fully on consumers if demand is perfectly inelastic

d. The tax burden will fall fully on consumers if demand is perfectly elastic

e. none of the above