The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. How is the salt tax burden shared between buyers and sellers in Healthyland?
A) Sellers pay the whole tax.
B) Buyers pay the whole tax.
C) Most of the tax is paid by buyers.
D) Most of the tax is paid by sellers.
Correct Answer:
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