Neither the demand for petrol nor the supply of petrol is perfectly elastic or inelastic. If the federal government eliminated the 18.4 cents per litre petrol tax, the price paid by buyers would

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The elimination of the petrol tax would result in a decrease in price paid by buyers, however, the decrease would be less than 18.4 cents. This is because neither the demand nor supply of petrol is perfectly elastic or inelastic, meaning that the change in price will not cause a proportionate change in quantity demanded or supplied. Therefore, the decrease in price would be less than the amount of the petrol tax.

Neither the Demand for Petrol nor the Supply of Petrol