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30 Sep 2018
6. [3 MarksAssume: supply is elastic, but not perfectly i.e., infinitely) elastic; demand is inelastic, but not perfectly inelastic. What must happen as the result of the introduction of a per-unit tax? (Assume there are still transactions after the tax is introduced.) A. Consumer surplus must decrease. B. Producer surplus must decrease. C. Producer surplus must increase. D. A and B. E. A and C.
6. [3 MarksAssume: supply is elastic, but not perfectly i.e., infinitely) elastic; demand is inelastic, but not perfectly inelastic. What must happen as the result of the introduction of a per-unit tax? (Assume there are still transactions after the tax is introduced.) A. Consumer surplus must decrease. B. Producer surplus must decrease. C. Producer surplus must increase. D. A and B. E. A and C.
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