Suppose that the government levies a $4 per month excise tax on cable TV.If the demand for cable TV is relatively (but not perfectly)inelastic and the supply curve is relatively (but not perfectly)elastic,then the price of cable TV will:

Question

Quizplus · Accepted Answer

When demand is relatively inelastic and supply is relatively elastic, consumers bear a larger burden of the tax. However, since neither is perfectly inelastic or elastic, the price will increase by less than the full amount of the tax.

Suppose That the Government Levies a $4 Per Month Excise